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Optimism (OP) Defies Market Trend: Will the Selling Continue?

Optimism's (OP) price action hasn't mirrored the bullish activity in the market with a huge retracement from the $3.95 resistance level.

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Over the past week, the entire crypto market has been on an uptrend. However, Optimism (OP) has embarked on a different run. While OP also enjoyed some gains, it hit a price ceiling around the $4 level. This saw OP experience a lot of selling pressure over the past three days.

With price trading at a critical support level, there is a possibility of the selling pressure being extended. On the other hand, buyers would be keen to rally from the support level.

Optimism: The Low-Cost Layer2 Solution for Ethereum Transactions

One of the issues currently plaguing Ethereum remains the high gas fees, especially during times of network congestion. This is the main problem the Optimism blockchain is solving.

Optimism is an L2 (Layer 2) protocol, enabling low-cost and swift Ethereum transactions. Optimism uses the roll-up mechanism to process multiple transactions off the Ethereum L1 chain, facilitating faster and more cost-effective transactions.

Optimism also ensures users enjoy speed and affordability along with Ethereum’s high-end security framework.

More Dips Likely for Optimism

OP is the native token for Optimism and its current price action tends toward more shorting opportunities in the short term. This is evidenced by the aggressive selling on the lower timeframe (4H) along with the signals from the on-chart indicators.

The Relative Strength Index (RSI) dipped below the neutral 50, hitting a low of 37. The RSI hasn’t been this low since the start of February. This hinted at a strong dominance of sellers. Similarly, Capital outflows strengthened with the Chaikin Money Flow (CMF) hitting -0.06.

Leveraging the selling pressure, short traders can wait for a bearish candle close below the $3.47 support level before entering new positions. This offers a 15% profit opportunity with a price target of $2.9.

Overall, traders should continually track the market sentiment for potential reversals, if price holds up at the support level.

Disclaimer: This article does not constitute trading, investment, financial, or other types of advice. It is solely the writer’s opinion. Please conduct your due diligence before making any trading or investment decisions.