LUNA: A journey to $120 or down the correction path?

Biraajmaan Tamuly
Source: Unsplash

LUNA reached a new-all time high valuation of $119.20 on 5th April. The digital asset has been on a tear in the market, momentarily reaching 6th in the rankings. It is currently placed 7th, behind Solana but its market cap is a mere $30 million behind. With momentum on its side, and the LFG foundation undergoing serious BTC accumulation, does the digital asset contain more gas in its tank to pull away towards higher highs?

LUNA Foundation continues to buy Bitcoin

Source: Twitter

According to recent data, the Terra foundation added 5040 BTC to its reserve, at press time. It is currently the third-highest Bitcoin holder that is publicly disclosed with 35,768 BTC. Now, while the Luna Foundation Guard or LFG is creating a Bitcoin reserve the defend the peg of its stablecoin UST, the market remains receptive to other factors.

At the moment, LUNA’s price could be looking at a momentary correction.

LUNA Price Structure 1-hour and 4-hour

Source: Trading View

While LUNA had registered a new all-time high less than 24-hours, its 1-hour time was now indicating the formation of an early bearish divergence. As illustrated in the chart above, higher highs were witnessed for the price but the Relative Strength Index or RSI made higher lows as defined by H1 and L2. Additionally, the price was also breached under a rising wedge pattern, which is a bearish signal.

Source: Trading View

Now, a strong confirmation can be observed on the 4-hour chart, where both the price and indicator pictured a bearish divergence as well. The same pattern on multiple time frames possibly strengthens the fact that LUNA is heading towards a correction.

How to trade this pattern

A short-trade can be set up in the $115-$116 range once the price bounces back on momentum. Based on the long-term time frame. LUNA will possibly drop down to $110-$105 for a correction, which allows traders to scalp in the short-time frame.

Entry Point: $115-$116
Stop Loss: $118
Take Profits: $110-$110