Jonathan Morgan
Independent Analyst
- Terra price action continues to shock the crpyto market.
- LUNA approaches its prior all-time highs, but a pullback is highly likely.
- Oversold conditions point to a retest of a critical breakout zone to confirm support.
Terra price has had a massive rally over the past week and a half. From the February 20, 2022 low of 47.30, LUNA has moved as high as $93.30, more than doubling LUNA in just ten days. However, the extreme of the move is now showing signs of exhaustion, and a pullback may be coming soon.
LUNA to fallback to strong Ichimoku support near %75
LUNA price action has been a significant surprise and a bright spot over the past two weeks. It has shaken off many of the concerns regarding the Wormhole debacle. Terra has recovered nearly all of its losses from December 27, 2021, to January 31, 2022.
From a technical analysis and Ichimoku perspective, LUNA has moved dramatically out of equilibrium. As a result, there are now significant gaps between the bodies of the daily candlesticks and the Tenkan-Sen. However,
gaps between the Tenkan-Sen and candlestick bodies do not last long. As such, a return to the Tenkan-Sen at $75 is very probable.
The $75 value area also contains the daily Kijun-Sen and the top of the Ichimoku Cloud (Senkou Span B). One interesting observation on the daily LUNA price chart is the lack of a retest of the breakout above the Ichimoku Cloud.
Other factors contributing to the likelihood of a pullback for Terra price is the extremes in LUNA's oscillators. For example, the Relative Strength Index is close to the first overbought level in a bull market (80), while the Composite Index is trading at historical all-time highs. Likewise, the Optex Bands oscillator is now in extreme overbought territory and has been for five consecutive days.
LUNA/USDT Daily Ichimoku Kinko Hyo Chart
While a pullback to $75 is the most likely method for a mean reversion, it is not the only method. For example, LUNA price could trade sideways within the Ichimoku system while the Tenkan-Sen slowly returns (moves higher) to equilibrium with price. In that scenario, LUNA price would likely trade in a range for the next seven to twelve days.
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