LUNA: Why traders shouldn’t hold out for a bullish guarantee
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Since it fell by 35% during 7 September’s sell-off, LUNA has done well to recover ground on the charts. A 100% jump was observed in the next 4 days, pushing the price to an ATH of $44.5. After negotiating another period of selling pressure, LUNA embarked on a fresh rally and prepared to challenge additional price ceilings.
At the time of writing, LUNA was valued at $37.6, up by 3% over the last 24 hours.
LUNA Hourly Chart
High volatility during the month of September has seen LUNA register sharp rallies, but also strong sell-offs. A double top formed at $23.5 kickstarted another rally, pushing LUNA above its $31 and $34 price ceilings. Its recent bounce back from the 200-SMA (green) and subsequent corrections gave rise to a bull flag pattern and presented chances of another upswing.
From here, a rebound from the $36.6-$37 support would enable an upwards breakout from the pattern and push LUNA to $40 and $42. Overall, this would mark a near 13% hike from LUNA’s press time level. However, LUNA would require assistance from the broader market for a bullish outcome.
With Bitcoin and Ethereum looking weak on their respective charts, it seemed likely that losses would spill over to LUNA’s market as well. In such a case, support lines of $34 and $32.6 would be in focus.
The hourly indicators gave up their bullish positions, but such readings were common within a bull flag. The RSI pointed south from the mid-line after stabilizing from overbought levels. Since LUNA was still within an uptrend, the RSI can be expected to find support between 50-45 and push higher.
Such was also the case with the Awesome Oscillator and the MACD. Now, some bearish pressure was evident on each of these indicators and losses could amplify if they moved deep below their respective mid-lines.
Hence, a bearish outcome cannot be discounted as well.
Although LUNA took shape within a bullish pattern, an upwards breakout did not seem guaranteed. Losses could extend to greater levels if LUNA is unable to hold on to the $36.6-$37 support.
Meanwhile, traders must wait for a breakout confirmation before taking up any long or short positions.