Why Terra's LUNA price action has no chance of going higher anytime soon

Terra (LUNA) price action is being squeezed, and bulls are aiming to break higher, which could be a big issue, as a bull trap could be set to unfold. On the back of the US dollar strength, LUNA price has been trading lower, as investors still remember how Terra almost collapsed under the first big wave of consecutive days of greenback dominance. With several forecasts out for more US dollar strength to come, LUNA does not look to be in favor of investors and traders, and on the back of that low interest, it could drop another 18% to 20% towards $0.0000088.

LUNA price still needs to recalibrate with a stronger USD

Terra’s LUNA price action has been taking a firm step back after last week when the dollar strength kicked in again, and of course, LUNA needed to be recalibrated. Of course, traders and investors had not forgotten about the debacle before the summer, where the initial round of dollar strength triggered a the Terra stablecoin implosion, breaking the USD peg. Warnings must be issued as traders might be wrong-footed as a bullish squeeze looks to unfold this week, which could mean a bull trap is awaiting ahead. 

LUNA price could either reject any further tests to the upside or, even worse, briefly spike to $0.000110 or $0.000115 and then drop massively intraday to wash out all the bulls and leave them with hefty losses. Bears will take over and run price action into the ground, helped by another round of US dollar strength that several American banks are forecasting. Line in the sand is at $0.000095, holding 10% of losses, with the risk that once that breaks, losses will double to 20% while trading at $0.000088.

LUNA/USD Daily chart

The bullish squeeze mentioned in the above paragraph could be the front runner of a non-event on Friday once Jerome Powell’s speech has been issued at the Jackson Hole symposium. To see that rally hit above $0.000115, the US dollar would need to back off, and a double tailwind should be present with stocks also rallying with the Nasdaq leading the charge. A steep rally towards $0.000137 could be feasible and erase June's big drop.