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LUNA establishes a temporary beach but could it slide lower

Warning: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.

LUNA dipped from its all-time high at $119.55 on Binance, and it fell below the $84 area where the price saw a strong bullish impulse in mid-March. However, the bulls would have a rope to hold as long as LUNA can stay above $70.7.

It was unclear if the native Terra token was in a retracement, or if the selling pressure is intense enough to force a further decline. Bitcoin was just above the $40,000 mark, and if BTC drops below $39.2,000, the fear in the market could intensify and force LUNA to register more losses.

LUNA – 12 hour chart

Source: LUNA/USDT on TradingView

Last week, LUNA established a (white) range of $80.8 to $89.2. However, it retested the $87-$89 zone as resistance over the past few days. This was a bearish move. This hinted that LUNA might return further south.

The Fibonacci retracement levels were drawn based on LUNA’s move from $47.29 to $104.83 in the previous month. It showed the 50% and 61.8% retracement levels at $76.06 and $69.27, which has some confluence with horizontal levels of longer-term significance.

Trading volume has been dropping for the past few days, even as the price has been consolidating. This suggested that market participants were waiting for momentum in a certain direction before entering the fray.

Reasoning

LUNA establishes a temporary beach but could it slide further south?

Source: LUNA/USDT on TradingView

Both the RSI and the Awesome Oscillator showed strong bearish momentum. The RSI on the 12-hour chart was unable to break above the 40 mark, while the Awesome Oscillator also slipped below the zero line.

The DMI has also shown a strong downward trend underway over the past week, with the ADX and -DI (yellow and red respectively) above the 20 mark.

These developments took place in response to LUNA’s sharp drop from $116. The OBV also experienced a setback. Yet this southward move could be just that – a setback. The OBV continued to stay in an uptrend on a longer horizon.

Conclusion

Was LUNA pulling back towards the $70 mark in search of demand? Was this bearish move more than just a retracement? When in doubt, zoom out, the saying goes. As long as $70.6 holds, the bullish bias has some credence. Bitcoin could also influence the direction of Terra’s token.

Margarita W. Wilson

The author Margarita W. Wilson