Optimism experienced a difficult first half of the year, with its price declining nearly 80% from the January peak by the end of June. This sharp drop dampened sentiment among market participants.

However, price movements in July have started to indicate a potential shift, with bullish momentum gradually reappearing. The current trend reveals a specific technical condition that could need to materialize before any bullish continuation becomes more likely. So, what developments may be worth monitoring?

Optimism technical analysis

OPUSD - 4 Hour Time Frame

A key consideration for any potential entry is the closure of a critical price zone—particularly one that forms counter to recent liquidity flow. This concept can be practically assessed by reviewing OP’s behavior on the 4-hour timeframe.

Recently, the price conducted a corrective sweep of a Sell-Side Liquidity area, marking the first of two key conditions. This movement may indicate that institutional or commercial participants seeking long exposure had an opportunity to enter. In trading terms, “liquidity” typically refers to clusters of stop-loss or sell-stop orders that serve as counterparts to large buy orders.

The next crucial element involves confirmation. Within this framework, a candle close above the highlighted resistance zone (shown in orange on the accompanying chart) could validate a reversal scenario. If confirmed on the 4-hour chart, this development may open the way toward higher price levels—specifically the Buy-Side Liquidity zones and, ultimately, this year’s high, representing a potential 200% increase from current prices.

Optimism price target

OPUSD - 1 Day Time Frame

Conversely, a confirmed close below the key support zone (marked in blue) would negate the bullish scenario and could suggest the market is positioned for further downside. In such a case, price action may extend below the 0.5 Fibonacci retracement level, also indicated on the chart.

Beneath this level, two additional Sell-Side Liquidity zones are identified, which may serve as the next technical areas of interest—though in this context, they could be more consistent with a bearish continuation rather than a bullish reversal.