Optimism (OP) has been gaining momentum in the market, showing promising signs of recovery as it continues to trade within an ascending triangle formation. On-chain data reveals whale accumulation and an increasing open interest, suggesting that a potential breakout is imminent. The key question is whether OP can break through the $1.18 resistance level and surge higher in the coming days.

A Technical Setup for Potential Bullish Breakout

At the time of writing, OP was trading at $1.13, sitting just below the important $1.18 resistance. The token’s price action has formed an ascending triangle pattern, which is typically seen as a bullish setup. The rising trendline indicates that OP has been consistently gaining ground, and a breakout above the $1.18 level could push the price to new highs.

According to technical analysis, if Optimism manages to break above the $1.18 resistance with high trading volume, it could trigger a rally toward the $1.28-$1.31 range, representing a potential 24% gain. However, the breakout needs to be supported by strong volume to confirm the bullish momentum and sustain the price movement.

Whale Activity and On-Chain Data

Whale activity continues to play a significant role in Optimism’s market dynamics. Data shows that 83% of all OP tokens are held by whales, underscoring their influence over the price action. Despite the majority of holders (89%) being at a loss, the continued accumulation by large-scale investors is a positive signal for the token’s future performance.

The current exchange netflow of -$1.7 million indicates that OP is leaving exchanges, likely due to whale accumulation or short-squeezing. This further hints at the possibility of a price rebound, as whales may be positioning themselves for an upward trend.

Additionally, OP’s price trend is closely correlated with Bitcoin (BTC), with a correlation of 0.93. This means that OP’s price action is often influenced by BTC’s movements, making it essential to monitor Bitcoin’s performance as a key factor in Optimism’s trajectory.

Rising Market Sentiment

On the market sentiment front, Optimism’s relative strength index (RSI) has been gradually climbing. As of the latest data, the 24-hour RSI was at 36, with a slight increase to 49 on the 4-hour timeframe, indicating growing bullish sentiment. The 2.84 long-short ratio also points to positive sentiment, with more traders leaning toward a long position, expecting a price recovery.

Moreover, OP’s 0.26% increase in open interest signals a renewed interest from traders, further supporting the case for a potential upward breakout. The ascending triangle pattern is becoming more apparent, and with the rising open interest, it is clear that traders are expecting a move to the upside.

What’s Next for Optimism?

For Optimism to confirm its bullish outlook, it needs to successfully break and sustain above the $1.18 resistance level. If the breakout is accompanied by high volume and strong momentum, OP could see a rally toward the $1.28-$1.31 target range. However, if it fails to breach this key resistance, the price may retest the $1.13 support level, with a potential drop toward the $0.90 support zone.

Traders will need to closely monitor OP’s price action within this formation, as well as whale activity and Bitcoin’s performance, to determine whether Optimism can maintain its bullish momentum and potentially trigger a breakout.