Terra LUNA Price Nears Key Level After Rallying 45% This Week

A rebound rally in the Terra (LUNA) market this week threatens exhaustion as the price retests a key trendline for a potential pullback.

Descending channel risks decline LUNA

LUNA has been trending lower in a bearish channel – consisting of two parallel bearish trendlines since December 2021. In doing so, the Terra token usually tests the lower trendline as support for a rebound to the upper trendline, as shown in the chart below.

LUNA/USD daily price chart with descending channel. Source: TradingView

Likewise, a pullback from the upper trendline sends the price towards the lower trendline. For now, LUNA appears poised to repeat the correction move, following further cues from the daily relative strength index now approaching the overbought value of 70 – a sell indicator.

If the pullback occurs, the price would risk falling to its intermediate downward target near $52, coinciding with the 0.5 Fib line of the Fibonacci retracement chart pulled from $4 swing low to $100- swing high.

If an extended correction occurs, LUNA may retest $40, a 0.618 Fib line closest to the lower trendline of the descending channel.

LUNA best performer this week so far

The near-term bearish outlook comes after Terra’s price rise of 45% to around $68 this week, the best level since January 25. Interestingly, LUNA/USD moved higher despite bleak prospects elsewhere in the crypto market, led by the Russian military’s invasion of Ukraine that dampened investor sentiment at risk.

Related: Terra Avoids Worries Over Ukraine, Rises 18% in Three Days – Could LUNA’s Price Hit $200 Next Time?

This week’s second best performing token among the top cryptos was Cardano (ADA). Interestingly, ADA’s week-to-date returns are close to 6% below zero, meaning LUNA outperformed its closest rivals, including Bitcoin (BTC) and Ether (ETH), by a wide percentage margin over the said period.

Weekly performance of LUNA vs. other top assets. Source: Messari

LUNA’s superior performance was partly due to news of the $1 billion raised to establish a Bitcoin reserve for Terra’s stablecoin UST. In addition, Anchor Protocol (ANC), which recently received a $450 million UST from the Luna Foundation Guard (LFG), rose nearly 70% under Terra’s shadow.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Coin-Crypto.com. Every investment and trading move involves risks, you should do your own research when making a decision.

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