In July, the Terra price was a star-performer, surging almost 600% to a new record of $37.64. Since then, the LUNA token has lost 20% and seems undecided. The cryptocurrency market has experienced a change in fortunes over the last six weeks. Bitcoin’s ascent to $50k was undoubtedly good for the market as a whole, but the returns have not been evenly distributed. And although most of the market is higher, some assets have far out-performed others. The LUNA token is one of them.
Aside from a Mike Novogratz singing its praises a couple of weeks back, there has not been much in the ways of news recently for Terra (LUNA/USD). Well, that is, aside from the fact, its native token LUNA coin has been tearing up the charts. Due to the rapid rise in the last two weeks, Terra has leap-frogged projects such as Polygon (MATIC/USD) and ChainLink (LINK/USD) to become the 12-largest cryptocurrency. But as is often the case with cryptos, it’s hard to know if rallies of this magnitude are fuelled by fundamental improvements or by retail traders, fear of missing out (FOMO).
Sometimes, with a lack of fundamental factors to consider, we must turn to the price action for clues about what comes next.
LUNA Price Forecast
Looking at the daily chart, several developments stand out. Firstly, after reaching the previous all-time high on the 19th, the Terra price has chopped around in extremely volatile conditions. Although, after dropping 30%, LUNA eventually made a new high on the 30th, before again reversing lower, showing the characteristics of a topping process. Furthermore, the RSI has turned lower and at 63.22 could have more downside ahead. Not to mention, the Moving Average Convergence Divergence Indicator (MACD) is in negative territory, suggesting momentum is weakening. But most telling of all is the lack of volume. The latest rally has seen nowhere near the volume evident in the bull run earlier in 2021. This could be a worrying sign that the recent gains have been running on fumes, possibly leading to an extended correction if technicals are breached on the downside.
Below the market, the first level to watch is the horizontal support offered by last week’s $26.30 low. This is reinforced by the 38.20% Fibonacci retracement level at $25.33. Furthermore, below $25.33, LUNA sees good support at May’s former ATH at $23.30.
However, the real test comes around $21.00. The 50% Fibo retracement level at $21.52 combines with the 50 DMA at $20.70 and trend line support to create a considerable area of support. As long as the Terra price stays above $20.70, the bulls remain in control. Although should LUNA drop below $20.70, the bears could charge, forcing long liquidation and pushing the price back to the 78.6% retracement level and the 200 DMA at $12.36.
Terra Price Chart (Daily)
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