Technical Analysis

Link and OP technical analysis: Can support hold and trigger breakouts?

Published: Oct 9, 2024

LINK is testing $10 while OP holds strong above $1.55, both showing signs of potential upward moves. Join us as we dive into the latest price action for these assets.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

LINK:

Market context

When we look at LINK on the monthly timeframe, the $8.22 price point stands out as a key level. Back in December 2020, we saw the price wick down to this level before setting off on a parabolic bull run. Since then, this area has remained significant, with prices consolidating above it for over 500 days during the 2023 and late 2022 bull market, acting as resistance.

In October of last year, we broke out from this zone, with prices swinging 170% up to $22.90 as bullish momentum returned to the market. More recently, we've seen prices return to this level on the 1st of October and the 1st of August 2024, which is quite interesting. The formation of a shooting star candlestick on the monthly suggests buying pressure is still present, similar to the pattern we saw back in 2020.

Buyers have been holding prices up at this level, creating a potential magnetization zone, but we're now seeing a strong bearish candle on the monthly timeframe.

1. Chainlink (LINK) monthly price chart showing key support at 8.22 and resistance levels at 18.10 and 22.90.

Switching to the daily timeframe

we can see that $10 has acted as key support over the last few weeks. This is interesting because, despite the bearish trendline still being respected, the price could be forming a wedge pattern. If bidders continue to hold the $10 level, this could be the area where we see a reversal and a push toward higher prices, with $18.10 being a significant target.

This level served as the sell-off point in April-March 2022 for LINK and was also tested at the end of May this year. If the price manages to break above $10 and regain momentum, a mid-term target of $22.90 is in play. However, if the price breaks down below $10, we'll look toward $8.22 as the next strong bidding area, which could provide a stronger return.

2. Chainlink (LINK) daily price chart displaying 10 support level, downtrend resistance, and potential targets at 18.10.

LINK is part of our CPRO picks, and while it's not currently something we're invested in, it's a strong contender. The fact that it has broken the April-March 2022 sell-off within its context highlights its potential for strong performance this cycle. Buyers have shown enough demand at key levels, and this sets up the opportunity for a decent move.

Playbook

Key levels

Support: $10, $8.22
Resistance: $18.10, $22.90

Trading setup

The $10 level is key for accumulation. If the price holds here and breaks above the bearish trendline, we could see a move toward $18.10, with a mid-term target of $22.90. If the price breaks down, $8.22 would be the next strong bidding zone.

Risk Management

Accumulating around $10 provides a solid risk-to-reward setup, but failure to hold this level would mean a reassessment of the position. Below $10, $8.22 would be the next level to target for bids.

Market sentiment

LINK has shown strength in reclaiming levels and remains part of our CPRO picks. The potential for a reversal at $10, combined with significant levels like $18.10 and $22.90 as targets, makes this asset one to watch closely. The bearish trendline is still in play, but the structure shows signs of a potential breakout.

Cryptonary's take

LINK is at a key point, and while we're not currently positioned in it, the potential for a strong move is clear. A hold above $10 and a push toward $18.10 could allow for a significant upside, with $22.90 as a mid-term target. As always, we're monitoring the asset for opportunities, and buyers should be aware of key levels, like $8.22 for accumulation if we see a breakdown.

OP:

Overview

Optimism ($OP) has consistently presented strong trading setups, and it's one of those assets that I've closely followed over the years. Back in Q4 2023, I (Kushal) captured a great opportunity when $OP found support from a key demand zone it had established earlier that year. At the time, $OP had pulled back and showed strength while consolidating, making it an ideal swing trade setup.

Now, in 2024, we're seeing a similar structure emerge. $OP continues to exhibit a prolonged bullish trend with clear higher highs and retracements into key demand zones. As of now, $OP is trading within the crucial demand zone between $1.14 - $1.46, an area that previously marked a strong accumulation base. Given the current bullish market sentiment, it appears that we could be approaching another significant upward move.

Weekly timeframe analysis

On the weekly chart, $OP has consistently maintained a bullish structure since its launch, with higher highs followed by retracements into key demand zones before continuing its upward trajectory. This pattern reflects the coin's ability to build strong bases of support, propelling its next moves higher.

Right now, $OP is trading at $1.55 trading, just above its demand zone, ranging from $1.14 to $1.46, an area that has historically provided a solid foundation for upward movement. This current zone is critical as it aligns with a demand area created back in September/October 2023 (marked by the orange circle).

Coincidentally, this was around the time when I initially took longs on $OP because I recognized it taking support from an earlier demand zone created in December 2022 (marked by the purple circle). This repeat of history shows how $OP has been moving within a well-defined structure, constantly using these demand zones to reset, accumulate, and push higher.

By sticking to this well-established higher-high and higher-low pattern, $OP's price action reflects market support, keeping it well-positioned in this prolonged bullish cycle.

Key observations

Demand zone: $1.14 - $1.46 remains a crucial accumulation area.
Support strength: If the price continues to hold in this area, we could see a solid move upward.
Potential risks: A break below $1.14 could lead to further downside, with the next key support area around $0.95.

3. Optimism (OP) weekly price chart showing key demand zones between 1.14 and 1.46, with potential resistance at 2.31 and 3.01.

Daily timeframe analysis

On the daily chart, we've seen some significant developments with $OP recently. Back in mid-July, $OP broke out from a persistent downtrend that had been in place ever since the all-time high (ATH) of $4.86 back in March 2024.

The breakout wasn't just a quick run either; it gave a solid retest to the trendline in early August, which, in my experience, adds serious confluence to the setup.

Right now, $OP is facing some resistance from a supply zone that's marked between $1.98 - $1.81, and this is where things get interesting. Not only is the price fighting this zone, but we've got the 200 EMA sitting right around $1.93, too. That makes this zone a critical level to watch. In my opinion, flipping this zone and turning it into support is essential if $OP is going to shift fully bullish and make those bigger moves we're anticipating.

If $OP manages to break above and hold, the next immediate resistance is sitting at $2.31. And if we flip that, we're likely talking about a move to $3+ in the medium term. Those are the targets we'd be eyeing for swing opportunities.

On the downside, the weekly demand zone between $1.14 - $1.46 remains our strong support level. If we do see a retracement or failure to break the current resistance, this demand zone should act as a solid area for accumulation. For me, the confluence of the 200 EMA and the supply zone makes this a very key area to watch. If we flip it, I wouldn't be surprised to see some decent swing setups in the near future.

4. Optimism (OP) daily price chart illustrating resistance between 1.81 and 1.98, with support at the 1.14-1.46 demand zone.

Cryptonary's take

The price action for $OP is shaping up similarly to the setups we saw in late 2023. The current retracement to a critical demand zone, along with the wider market becoming bullish, offers a potentially strong upside for $OP. Flipping key resistance levels will be crucial for confirming this bullish thesis, but the setup looks promising for possible swing opportunities in the medium term.