Terra (LUNA) Price Strategy – Can LUNA continue to defy the broader market trend?

Saif Naqvi
LUNA
Source: Pixabay

Defying the broader market trend yet again, LUNA’s price recorded an extra 5% increase over the last 24 hours compared to most other alts which exhibited rangebound movement. However, some warning signs on the daily indicators pointed towards a near-term correction. Going forward, the focus should be on LUNA’s immediate defenses at $75, from where the next leg upwards could take shape.

Luna Daily Chart

Source: TradingView

Unlike most alts which have pared gains between November 2021-March 2022, LUNA’s uptrend has been relentless in the market. The alt maintained its streak of lower lows since the crypto crash in July, climbing by as much as 2,485% over the past eight months. Another 14% ascent would bring LUNA to its ATH and the trend-based Fibonacci tool showed that $124, $154, and $203 were the next significant areas on the chart.

On the downside, a minor retracement can be expected before bulls lead the charge to a new ATH. The daily RSI formed two lower highs between 28 February – 10 March and highlighted a bearish divergence concerning LUNA’s price. Such divergences occur when the price rises to a new high but the indicator refuses to record a fresh peak. Bearish divergences often act as precursors to corrections or downtrends. An unfavorable development on the MACD also heightened the chances of profit-taking. The fast-moving line (blue) slips below the Signal line (orange) once buying momentum starts to wain.

TVL At Record High

Source: Defi Llama

Those fearing that a potential correction might disrupt LUNA’s uptrend should take note of the platform’s total value locked. Terra’s TVL has increased constantly throughout February and is currently at record levels, with $25.7 Billion locked within the platform. Notably, more than half of the TVL comes from the Anchor Protocol, which is a decentralized lending application built on the Terra blockchain. Normally, a rising TVL is healthy for any project as it shows that investors are actively engaging with the platform’s staking and lending mechanics.

Price Strategy

Source: TradingView

With threats of a near-term correction on the higher end, one cant wait for LUNA to dip to $75-support before placing a buy order. Take-profits can be set at the 100% Fibonacci Extension at $124. Stop-loss can be kept below an earlier swing low of $50. The hypothetical trade setup carries a 1.96 risk/reward ratio.