Key Takeaways
Optimism (OP) has shown a significant price increase, beginning with a strong uptrend from $1.15 to $4.80 by March 6.
However, it experienced a steep decline of 38.5%, and by August 5, the price had dropped to $1, losing over 78% of its value.
Currently, OP is approaching a key decision point within an ascending flat triangle, where the direction of the next breakout will define the future trend.
Since October 20, 2023, when the price of OP was $1.15, a significant uptrend emerged, pushing the price to a peak of $4.80 on March 6.
This high marked the end of the uptrend, as the price experienced a 38.5% decline immediately, dipping below $3 on March 20.
By Aug. 5, Optimism’s price had dropped to $1, losing over 78% of its value. This could have been the competition for its WXY correction, especially as we saw the formation of an ascending flat triangle afterward.
OP’s price broke above the descending resistance but was kept below $2, its horizontal resistance. Currently, we are seeing another interaction with the ascending support as the price approaches the triangle’s apex.
Breakout direction will provide further insight into the next dominant trend, but as there is an equal probability of a breakout from each side, two scenarios are ahead.
The ascending triangle is the second wave X with one more wave to the downside left in this corrective pattern.
In this bearish scenario, one more lower low for wave Z to develop could bring OP to the $0.80 area.
Alternatively, the ascending triangle is the first uptrend in the next bull phase, in which a breakout to the upside will lead to a larger recovery. So which is more likely?
The wave structure inside the ascending triangle cannot conclusively indicate which pattern is developing.
However, there will be some confirmations moving forward. If the price had been made a corrective structure, it should have ended on Sept. 28 at a high of $1.93.
In that case, following a downtrend to $1.48 on Oct. 3 and the subsequent rise, the first two sub-waves of the next wave, Z, are already being developed.
However, there is also a case to be made that OP is in a leading diagonal, with its Sept. 28 high being wave 3 from the five-wave pattern.
In the bullish scenario, another higher high after OP bounces from ascending support will confirm the five-wave pattern.
After a correction, the price could be set for a sustained upward advancement. As stated above, it would be best to wait for a breakout and see its direction.