Should you buy Optimism (OP) as token tests support

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November 10, 2022 by keithhill530

[ad_1] Optimism (OP) remains in a bullish market. The token tested a monthly-high resistance of $1.37, although it is not cooling down. Its trading volumes are, however, up 54% at $355 million in the past day. The blockchain has been recording significant trading activities. Data from DefiLlama shows a significant gain in Optimism’s TVL over

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Optimism (OP) remains in a bullish market. The token tested a monthly-high resistance of $1.37, although it is not cooling down. Its trading volumes are, however, up 54% at $355 million in the past day. The blockchain has been recording significant trading activities.

Data from DefiLlama shows a significant gain in Optimism’s TVL over the last three months, peaking at $1.15 billion in August. The growth could be attributed to developers looking for scalability in Ethereum.

Optimism is a layer-2 blockchain on Ethereum aimed at the scalability of decentralised applications. The platform launched its testnet in September 2020. Its native OP token allows end users to access dApps on Ethereum cheaply. OP is also useful in governance by granting holders voting rights in the Optimism Collective.

The current price dynamics of OP token is not tied to anything specific in the industry. However, the fundamentals around scalability have growth potential. Specifically, Optimism rollups, which wrap up transactions into one, could popularise the layer-2 platform.

OP retraces to $1 support amid a bullish momentum

Source: TradingView

The daily technical chart above shows that OP is retesting the support at or around $1. The token looks to have slightly lost the $1 level, although we need further confirmation. A close of the daily candlestick will confirm if a bearish breakout has occurred. To the upside, the immediate resistance is at $1.4, while $1.9 is the longer-term resistance level.

MACD looks bullish, while the RSI has remained below the overbought zone, meaning it could go higher.

Concluding thoughts

Based on the fundamental aspects, OP could bring value to its users in the long term. From the technical chart, the token is retesting support with a bullish momentum. Although the token is on a retracement, a bounce off from the support level could occur.

A confirmation of a bullish price action signal would welcome an upside momentum for Optimism. At the current price, it would be prudent to exercise patience until proper buy signals pop up at the immediate support level.