- Optimism becomes LunarCrush’s coin of the day at an essential price.
- OP is reining in its downside after a volume resurgence and may be headed for a pivot.
OP, the native token for Ethereum’s layer 2 network Optimism, had a great start in January and early February. It was mostly bearish after that, but what goes down will eventually go up.
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OP was flashing bullish signals at the time of writing, but will the bulls take a significant win? First, let’s take a look at the latest news about the token. LunarCrush has chosen OP as coin of the day in the last 24 hours. While this may not mean much in the grand scheme of things, it underscores the growing interest in the token.
LunarCrush’s observation may also indicate that investors became more interested in OP. It also reflected improving investor sentiment as seen in the weighted sentiment metric. OP’s weighted sentiment registered a healthy rebound after the May 27-28 trough.
Source: Sentiment
But why are these observations important, especially as we are in a new month? Well, that largely has to do with the current price position. The token has maintained a bearish bias for the past four months, breaking into the oversold zone just once earlier in May.
OP bulls are about to take over
OP was oversold on both the Relative Strength Index (RSI) and the Money Flow Index (MFI) at the time of writing. This may have been one of the reasons why the token attracted visibility and attention.
The RSI position at the time of writing also underlined some price-to-RSI divergence. In other words, the token was in a position that many would consider a potential buy zone.
Source: TradingView
While current expectations were optimistic, traders should also note that OP’s 50-day moving average was closing in on the 200-day moving average. A bearish sign called a death cross forms when the 50-day MA crosses the 200-day MA from above.
A look at OP’s on-chain volume revealed it was growing towards the end of May, with its weekly peak in the past 24 hours. His social dominance also recorded his highest weekly peak in the past 24 hours, confirming that he did indeed get a lot of attention.
Source: Sentiment
Based on these findings, we can conclude that there was a high probability of a significant bullish bounce. It bounced as much as 26% the last time it plunged into oversold territory. While bullish expectations were high, a rally is not necessarily guaranteed, hence traders should exercise caution in the event of a prolonged downtrend.