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- OP price increased to $2.16 but traders may need to wait for a reversal to make gains.
- A strong support at $1.72 could help sustain entries between $1.80 to $1.85 if OP pulls back.
- OPs’ funding rate was positive, suggesting that traders are bullish on the price action.
Michaël van de Poppe, crypto investor and founder of MN Trading told his X followers that they should be careful about buying Optimism (OP) at any value. He further noted that they should focus on finding entries between $1.85 and $1.935.
Van de Poppe also added that OP would most likely follow in Ethereum’s (ETH) direction. So, those looking to buy OP should watch out for the price action of ETH.
Request 03 – $OPAnother one follows the path of Ethereum.If there's a correction, then it would be wise to look at the region between $1.85-1.935 to ensure you're getting a proper entry.Right now, you're basically chasing the candles. pic.twitter.com/mUqf8I2gFn— Michaël van de Poppe (@CryptoMichNL) December 7, 2023
OP Follows ETH the Leader
The analyst’s opinion seemed valid when considering the price action of OP and ETH price action on December 7. According to CoinMarketCap, ETH rose as high as $2.375 on the said date while other altcoins followed.
But for the Optimism token whose fundamentals revolve around scaling on Ethereum, it climbed double-digits. At press time OP’s price was $2.16, representing a 23.25% increase in the last 24 hours.
OP 24-Hour Price Performance (Source: CoinMarketCap)
The movement of both cryptocurrencies implies that the correlation between them was strong. Therefore, if ETH rises, OP would likely follow. Arbitrum (ARB), the token of the other Ethereum L2 also towed the same path, increasing by 7.56% in the last 24 hours.
OP’s Reversal Is an Opportunity
As of this writing, OP seemed overbought as indicated by the Relative Strength Index (RSI). The RSI reading according to the OP/USD 4-hour chart was 74.82. If buying momentum for OP increases, and ETH price continues to increase, then the RSI reading could hit 80.00.
However, if this is the case, the reading could lay grounds for an OP retracement. Also, there was strong support at $1.72 that could prevent the OP price from going below the level irrespective of the profit-taking.
Coin Edition also considered the Auto Fibonacci Retracement. A look at the technical data showed that the 0.236 Fib level was around $1.80. This means that there could be a nominal pullback to the level.
OP/USD 4-Hour Chart (Source: TradingView)
Therefore, entries around $1.80 up to $1.85 could be okay for traders looking to long. This is because there could be a bullish reversal if OP taps any point within the said region. Meanwhile, it seemed like traders were unbothered about OP’s overbought status.
According to Coinalyze, OP’s funding rate was 0.034, suggesting that the bullish sentiment in the market was still very present. Also, the aggregated projected funding rate was $0.047, indicating that more contracts linked to OP would tilt toward the bullish side.
OP Aggregated Funding Rate (Source: Coinalyze)
In its present state, OP may drop below $2 if the selling pressure increases. However, it is likely that it only takes a short while before the token value jumps.
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