Technical Analysis

Optimism at $1.95, XRP near resistance

Published: Dec 25, 2024

As the market retraces, optimism holds strong in its demand zone, and XRP consolidates within a tight range. Let’s explore their key levels and what it means for potential bullish breakouts.

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.

Optimism ($OP):

Overview

Optimism ($OP), one of Ethereum's prominent Layer 2 solutions, has retraced following the broader market correction. After making a local high of $2.78 on December 7th, $OP experienced a pullback of 41.97%, dipping to a low of $1.61 on December 20th. This low aligns with the daily demand zone, marked between $1.8 and $1.6, which has acted as a key accumulation area.

Currently trading at $1.95, OP is showing signs of recovery, but it faces immediate resistance at the 200 EMA on the daily time frame, which is positioned at $1.97. This level will play a crucial role in determining whether $OP can regain bullish momentum.

Analysis

Support levels:

$1.8 - $1.6 Daily Demand Zone: This demand zone, marked by the blue box on the chart, has provided a strong foundation for $OP during the recent pullback. The price briefly dipped below $1.81, a previously mentioned key support, but quickly reclaimed the level, signalling strong buyer interest.
$1.81:This level has held up well during the pullback and remains a crucial short-term support.

Resistance levels:

$1.97 (200 EMA): The 200 EMA on the daily time frame is currently acting as a resistance. A flip above this level would not only solidify $OP's bullish structure but also provide strong support for further upward movement.
$2.315:The first major resistance is on the upside. Breaking this level would confirm a significant bullish shift.
$2.78:The recent local high and a key resistance level align with the previous rally.
$3.01:A critical psychological and technical resistance that $OP must overcome to confirm a long-term bullish breakout.

Price action:

The reaction from the daily demand zone has been positive, with $OP rebounding strongly off the $1.61 low. If the asset can sustain above the demand zone and reclaim the 200 EMA, it sets the stage for a potential move toward $2.315 in the short term. Breaking above $2.315 would then open the path to the $2.78 resistance and beyond.

Optimism (OP) daily chart showing key support zone between 1.8-1.6, 200 EMA resistance at 1.97, and targets.

Cryptonary's take

Optimism ($OP) has shown strength by maintaining its structure within the daily demand zone despite the significant market-wide pullback. The $1.8 - $1.6 zone continues to act as a solid support, and the asset's reaction from this level has been encouraging.

For OP to regain bullish momentum, flipping the 200 EMA at $1.97 into support is critical. This would confirm strength and allow for potential moves toward $2.315 in the short term and $2.78 in the medium term.

Pullbacks like these are a natural part of market cycles, and OP's ability to hold key levels amidst broader retracements highlights its strength. While the immediate focus is on reclaiming the 200 EMA, maintaining the daily demand zone as a base will be pivotal for further upside. Optimism remains a solid asset to watch closely in the current environment.

XRP ($XRP):

Overview

XRP ($XRP), one of the top cryptocurrencies by market capitalization, has been trading within a tight range following a market-wide pullback. After reaching a local high of $2.9 on December 3rd, XRP retraced, hitting a low of $1.9 on December 10th, marking a pullback of approximately 34.5%.

Since then, XRP has been consolidating between the $2.75 resistance and the $1.96 support, with both levels playing pivotal roles in the current market structure.

A breakout on either side of this range could trigger a significant move, and XRP remains a key asset to watch for directional confirmation.

Analysis

Support levels:

$1.96:A crucial support zone that has been successfully tested during the recent pullback. This level has acted as a safety net for XRP, preventing further downside.
Below $1.96:If this level is lost, XRP could see a deeper retracement.

Resistance levels:

$2.75:The upper bound of the current range and a key resistance level. A breakout above this level could pave the way for a move toward $3.0 and beyond.
Above $2.9:Breaking this previous local high would confirm a bullish continuation, potentially targeting levels above $3 (psychological level), depending on market momentum.

XRP (XRP) weekly chart highlighting consolidation between 1.96-2.75, long-term resistance breakout, and potential upward targets.

Cryptonary's take

XRP's consolidation between $2.75 and $1.96 indicates a critical decision point for the asset. Holding the $1.96 support is vital for maintaining its bullish structure while reclaiming $2.75 would open the door for a potential retest of $2.9 and beyond.

The current range offers opportunities for both accumulation and breakout plays, depending on market behaviour. For now, patience is key as XRP navigates this tight range. A decisive move in either direction will set the tone for its next major trend, making it an asset to watch closely.