We’re back to checking out Terra (LUNA) this week, which unfortunately for the bulls, couldn’t escape the broad sell-off in the crypto space these past few weeks.
But with LUNA still in a strong technical uptrend, is there a scenario where this dip attracts fresh buyers or those looking to fill their bags further? Or is this just the start of a deeper correction?
LUNA/USD: Daily
The last time we looked at Terra (LUNA), the market was on a one way move higher and breaking its previous swing high around $78.50 in the process. And the party didn’t stop there for the bulls as LUNA/USD actually marched up to test the $100 handle as we expected on a break.
And again as we expected, $100 is where it found major resistance, likely on profit taking after 90% rally from December lows (around $53), and more likely on the broad turn in risk sentiment that has taken down risk assets, sparked by an explosion in negative pandemic conditions and rising interest rate concerns.
From a price action perspective, LUNA/USD is still in a very strong uptrend, albeit, getting more net volatile as the price increases. So, there is an argument that this near 40% dip is a buying opportunity for technical traders, with some likely nibbling on buys here at the 100 simple moving average (which support has formed many times this year as seen on the daily chart above).
But with a high inflation environment/rising interest rate fears driving the broad markets at the moment, we can’t ignore the potential scenario that this time may be different and that LUNA/USD could dip further.
If that plays out, we’ll be watching the area between $50 – $60 (where the rising 200SMA, rising ‘lows’ pattern, and previous strong area of interest meet) for bullish reversal candles to potentially play the uptrend and strong fundamental story for the Terra ecosystem (e.g., deflationary supply conditions, continued UST stablecoin growth & adoption, etc.).
Of course, if inflation and economic growth rates remain high, forcing the odds of monetary policy tightening to grow over the next few weeks, then there’s a possibility that we continue to see rising interest rates and a stronger U.S. dollar.
That would likely continue to be a negative for crypto assets, shifting the potential outlook on digital assets from ones to accumulate to ones to sell/take profit on in the short-to-medium term.
But what do you all think? Is LUNA a buy? Let me know in the comments section below!
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