Bearish Optimism Is Turning Bullish

Trading against the trend is often best suited for experienced traders, as without strong parameters and effective risk and money management, profitability is unlikely.

In this analysis, we provide insights into how traders can position themselves in the market before Optimism overcomes its bearish structures.

Daily time frame analysis

OPUSD - 1 Day Time Frame

The external market structure for Optimism (OP) remains bearish, but its internal structures are bullish, offering valuable information for a potential buying opportunity. On the chart, external levels are marked in blue, while internal levels are highlighted in yellow.

In addition to these structures, the chart also shows the inversion of the fair value gap, defining a support zone and order block. This element of algorithmic-technical analysis highlights where price delivery has shifted, signaling possible entry points.

When to buy Optimism?

For this strategy, we recommend splitting your position into two parts. The first half can be entered at the current price, while the second half should be reserved for a potential drop to the order block level. A stop-loss should be placed just below the internal higher low, with a take-profit set at the buy-side liquidity level.

Since the internal market structures are comprised of additional layers, it’s possible to hold the position even if the price falls below the order block. The original internal higher low is positioned lower on the chart, along with another support zone beneath the order block. These levels are represented by the lower orange line and the blue zone, respectively.

It’s advisable to sell a portion of your position whenever a bullish parameter is closed. By following these guidelines, traders can navigate the current market correction while managing risk effectively, allowing them to capitalize on the buying opportunities that arise.