Key points to remember
- The price of LUNA has increased by more than 100% in the last 10 days.
- Investors could now take profits as the technicals suggest.
- A spike in selling pressure could send prices plunging towards $77.
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Terra’s native token, LUNA, has seen strong gains over the past 10 days, outperforming much of the crypto market. Now it appears to be gearing up for a brief correction before prices move higher.
LUNA is ready for a brief correction
LUNA appears to be bound for a brief correction after doubling its price, with over 106% gains since February 20.
The altcoin appears to be overbought, and recent price action suggests that a peak in profit taking is near. As such, the price of LUNA could decline before resuming its uptrend.
Based on the technical data, a pessimistic short-term outlook seems imminent. The Tom DeMark (TD) Sequential Indicator is presenting a sell signal on the LUNA daily chart. A bearish formation has developed in the form of a green nine candlestick; if validated, LUNA could retrace one to four daily candlesticks until it finds stable support.
The Fibonacci retracement indicator, measured from the January 31 low of $43.40 to the March 2 high of $97.40, suggests that the potential price correction could extend to $77 if LUNA prints a daily close below $86. This level of fundamental support could be strong enough to prevent further losses and serve as an avenue for discarded investors to re-enter the market by buying the altcoin.
Additionally, market participants may experience “FOMO” if LUNA closes above its recent high of $97.40. Breaking above this critical resistance level could increase the buying pressure behind the asset, pushing prices to new all-time highs. LUNA might then find resistance as the price approaches $112-$120.
LUNA is currently the seventh largest cryptocurrency with a market capitalization of approximately $33.2 billion.
Disclosure: At the time of writing this article, the author of this article owned BTC and ETH.
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