Bearish Signals: OP's Head-and-Shoulders Pattern Foreshadows Correction

Optimism: Is a price correction coming? Assessing key levels

Optimism [OP] is currently exhibiting bearish signals, as a well-formed head-and-shoulders pattern emerges. This pattern often foreshadows a price reversal, suggesting a potential correction could be underway.

OP was trading at $1.12, at press time, after gaining 5.34% in the past 24 hours. However, this price movement may not be enough to hold key support levels, and traders should stay alert for further price action.

What’s driving OP’s bearish price action?

The price action of OP shows clear signs of weakness, particularly with the formation of the head-and-shoulders pattern. The left shoulder, head, and right shoulder all appear symmetrical, with the head forming a notable peak.

Currently, the price is hovering around a critical support level of $1.12. If this support does not hold, it could trigger a decline to support levels around $1.06 or lower. Investors should be cautious and monitor these price levels to anticipate potential market movements.

Source: TradingView

What do on-chain signals reveal about OP?

Analyzing the on-chain indicators conveys a more detailed narrative leading to a bearish sentiment for OP. Recent trends show that the net network growth has decreased by 0.87%, indicating a slowdown among new users and a reduction in network activity.

The “In the Money” metric has also dropped by 1.36%, which underscores the diminishing upward momentum. While there is a slight increase of 0.08% in concentration, this does not counterbalance the overall negative outlook highlighted by other on-chain data.