Terra Luna (LUNA) has gained significant momentum over the past three days, surging 30% in the last 24 hours to $0.9 before retracting to $0.7382. This rise follows a strategic investment move aimed at revitalizing, coupled with notable growth observed in the algorithmic stablecoin TeraClassicUSD (USTC). The price increase of the altcoin also signifies the breach of the resistance trend line of a long-term falling wedge formation, potentially indicating the beginning of a strong upward trend.
LUNA Price Analysis
LUNA‘s price has consistently been in a downtrend throughout the past year, following a falling wedge formation defined by two dynamic trend lines acting as resistance and support. However, the recent break above the formation’s resistance trend line suggests the downtrend’s momentum may have exhausted or possibly even ended. After encountering several rejection candles at the formation’s upper trend line, the altcoin’s price has now overcome this barrier for the time being.
The recent increase and break appear to be a result of Terra Classic Lab’s treasury strategy, which involved purchasing approximately 25.6 million USTC at an average price of $0.021, amounting to around $500,000, subsequently contributing to the growth of the stablecoin.
Currently, LUNA is trading at $0.7382, and if buyers manage to keep the price above the broken resistance line, a recovery rally could continue, potentially targeting approximately $2.54 and $3 as indicated by the channel formation.
Is This Recovery Sustainable?
A review of the daily time frame chart reveals the formation of a long-wicked rejection candle bound to the breakout candle, suggesting buyers are struggling to maintain the price above the resistance line. A news-driven rally that fails to sustain this breakout could invalidate the previously mentioned bullish thesis and result in a potential bull trap, potentially intensifying selling pressure and driving the price down to $0.55.
Average Directional Index (ADX) indicator’s slope is currently at the 39% level, pointing towards a potential exhaustion point that could support a minor pullback. Furthermore, the green film on the Super Trend indicator in the daily price chart indicates a positive sentiment dominating the market.
- LUNA shows signs of a bullish breakout.
- Recent gains could signal a trend reversal.
- Investor caution is advised for sustainability.
