Terra (LUNA) price analysis: More pain ahead?

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Terra (LUNA) may remain weak in the short term

Terra (LUNA) price analysis                                 
Terra (LUNA) may remain weak in the short term – Photo: Alamy
                                

Contents

After the recent sharp correction, Terra’s LUNA token is trying to start a recovery as of 14 April 2022. Terra has been in the news for the past few weeks because of its massive Bitcoin purchases.

The latest acquisition was done on 13 April, when the wallet belonging to the Luna Foundation Guard (LFG), the nonprofit organisation attached to the Blockchain protocol Terra, showed an addition of 2,508.94 bitcoin, worth around $100m. 

After the latest purchase, the total holding of the wallet has soared to 42,406.92 Bitcoin,currently worth almost $1.7bn, according to data from BitInfoCharts. Terra is fewer than 800 Bitcoin away from overtaking the total stash of Tesla, which is 43,200 Bitcoin.

Along with the Bitcoin purchase, LFG and Terraform Labs, the company behind the development of Terra, purchased $200 million worth of Avalanche tokens to diversify reserves for its UST stablecoin.

Do Kwon, founder of Terraform Labs, explaining the reason for choosing Avalanche,  said: “Avalanche is still a growing ecosystem... a lot of it is fueled by loyalty to the AVAX token and users feel a lot of affinity with an asset that aligns itself with AVAX. Whereas for the average Ethereum user, aligning yourself with Ether doesn’t really mean that much,” Bloomberg reported.

Could Terra (LUNA) go up if Bitcoin stages a strong recovery? Read the LUNA price analysis to find out.

LUNA weekly chart
LUNA weekly chart – Credit: Currency.com


LUNA price technical analysis: weekly chart

The bulls could not sustain the spike above the psychological level of $100, indicating profit-booking at higher levels. LUNA’s price started a correction and has pulled back to the 38.2% Fibonacci retracement level of $88.60. If this level cracks, the next stop could be the 50% retracement level of $81.11. The bulls are expected to defend this zone with vigour.

If the price rebounds off this zone, it will suggest that the bulls continue to buy on dips. The bulls will then again attempt to push the LUNA/USD pair above the overhead resistance at $100 and challenge the all-time high.

A break and close above the all-time high could signal the resumption of the uptrend. The pair could then rally to $125 and later to $150.

However, the relative strength index (RSI) is showing a negative divergence, indicating that the bullish momentum is weakening. If bears sink the price below the 61.8% Fibonacci retracement level of $73.61, the pair could plummet to $62.94.

LUNA daily chart
LUNA daily chart – Credit: Currency.com


LUNA price technical analysis: daily chart

LUNA’s price turned down sharply from the resistance line of the ascending channel and plunged below the support line. This invalidated the channel, indicating a potential change in trend. The relief rallies have been short-lived suggesting that bears are selling on every minor rise.

If the price turns down from the current level and breaks below $82, the selling could intensify. The pair could then extend its decline to $77 and later to $72. The RSI below 43 indicates advantage to bears.

Contrary to this assumption, if the price turns up from the current level, the bulls are likely to pose a strong challenge in the zone between $97.50 and $100. 

A break and close above $100 will be the first indication that the correction may be over. The buyers will then attempt to push the pair toward the all-time high.

LUNA: Buy or sell this week?

LUNA’s price analysis suggests that the bears have the upper hand in the short term. If the $82 support cracks, the pair could decline to $77 and then to $72. The bulls will have to push and sustain the price above $100 to indicate a comeback.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision. 

Further reading

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