LUNA needs to do this after losing its long-term trendline support
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
In its previous rally, bulls pierced through multiple price ceilings and marked exponential gains as Terra (LUNA) attained its lifetime milestone on 27 December. Since then, the last five weeks have led LUNA into a correction phase while it lost 23.6% and 38.2% Fibonacci supports.
From here on, until the buyers can step in to reclaim the $54-mark, the long-term bullish trendline will obstruct any revival attempts by the bulls. The 61.8% support stands as a significant landmark for a decisive trend in the days to come. At press time, LUNA traded at $48.07, down by 9.96% over the last 24 hours.
LUNA Daily Chart
Since its ATH, the alt lost 58.28% in just 35 days as it rushed to poke its one-month on 31 January. As a result, it breached its six-month-long bullish trendline support (yellow) and flipped it to immediate resistance.
In this retracement phase, the 20 SMA (red) and the 50 SMA (cyan) witnessed a bearish crossover after nearly six months. This reading reaffirmed the increasing bearish vigor.
As the alt formed a falling wedge (reversal pattern, yellow) on its daily chart, a likely retest of the $54-mark resistance would only be plausible. Also, the $43.2 (61.8% Fibonacci) and the $38.5-level remain to be a critical range for the buyers to defend. Failing to which, it could see the beginning of a steep downtrend.
The RSI saw a substantial diminution as it gravitated towards its eight-month low on 31 January. Moving forward, it has conceivable chances of seeing a near-term recovery. On top of it, the AO flashed green bars, hinting at the slightly decreasing selling power.
But the +DI and -DI lines refrained from displaying any improvement whatsoever. Thus, one cannot discard the possibility of LUNA testing the golden support before a reversal.
Keeping in mind the oversold readings on its daily RSI and the reversal pattern formed, the chances of LUNA retesting the $54-mark stood bright in the days to come. Having said that, the investors/traders must keep a close watch on the broader sentiment affecting the perception of the alt.