Archived Article This article was published more than 5 months ago. The market data, prices, forecasts, and analysis were accurate at the time of publication but may have changed since then. Please use this article for historical reference only and refer to our latest content for current market information.
- The riotous Terra price rally is showing signs of stress. LUNA has dropped 20% and may have more downside ahead in the coming days.
The riotous Terra price rally is showing signs of stress. LUNA has dropped 20% and may have more downside ahead in the coming days. Over the last week, LUNA, the coin that powers stablecoin blockchain Terra, has been trading violently between $26.00 and $35.65. This period of price discovery is showing the classic signs of a top.
Following a 530% rally, It’s hardly surprising that LUNA is struggling for direction. On the 20th of July, the coin was trading at $5.52. A month later, LUNA was changing hands at $35.65. This fantastic four-week rally has lifted Terra to the rank of the 15th largest cryptocurrency, with a market cap of $11.4 billion at the time of writing. But even with the crypto market enjoying a return to the earlier form of 2021, the price is looking incredibly stretched and ripe for a correction.
LUNA Coin Price Forecast
Some negative developments have occurred in recent days and the short-term technical outlook appears to be rolling over. Firstly, the rally took the LUNA price deep into overbought territory last week. The Relative Strength Index (RSI) peaked at a staggering reading of 91.36, and despite the price trading broadly sideways since, it is still a lofty 69.25. This suggests the coin is vulnerable to a reversal. Furthermore, the Moving Average Convergence Divergence Indicator (MACD) may also soon turn negative.
Due to the almost vertical ascent, technical support is not seen until a long way below the current price. The first target on the downside is the March $23.30 high, which sits just below the 0.385% Fibonacci retracement level. However, a deeper correction brings the May high of $20.26 into the picture. This is almost perfectly aligned with trend line support and the 50% Fibo retracement level at $20.57. Therefore, the $20.26 is a huge support level.
If the Terra price reverses lower from here, I would expect buyers to emerge as it approached $20.26. And as long as LUNA maintains this price on a closing basis, the uptrend stays in place. However, if the price slides below $20.26, the outlook turns extremely bearish. And in this event, an extension towards the 200-day moving average at $11.11 looks possible.
Terra Price Chart (Daily)
For more market insights, follow Elliott on Twitter.