Terra price signal that preceded an 80% LUNA rally is back
A technical setup that preceded an 80% price rally in the Terra (LUNA) market in August 2021 has appeared again.
LUNA paints bullish MACD crossover
The technical setup involves a so-called signal line crossover between LUNAs weekly MACD line equal to the difference between the tokens 12-week and 26-week moving averages (MA) and the nine-week MA called the signal line, plotted above the zero line, as shown in the chart below.
Together, these lines represent themoving average convergence divergence (MACD), a momentum oscillator to determine a market’s direction and momentum.
So, if the MACD line crosses above the signal line, markets interpret it as a bullish MACD crossover. Conversely, a bearish MACD crossover occurs when the MACD line falls below the signal line.
LUNAs weekly MACD line closed above its signal line earlier this month,raising speculations about a strong bullish momentum ahead. For instance, independent market analysts Argonautscited a similar bullish crossover from August 2021 that occurred before the tokens 80% price rally from $12 to $102.
Something is up on $LUNA weekly timeframe. Last time the MACD crossover occured it sent $LUNA from $12 to $106. #luna #nfa pic.twitter.com/9TYyGmp88j
Argonauts (@terra_hodler) March 20, 2022
Bearish divergence detected
The MACD-based bullish outlook in the Terra market also stems from LUNAs incredible price performance in the last 30 days.
Notably, LUNAs price has surged by nearly 90% after bottoming out at $47.25 on Feb. 20, now eyeing a run-up above $100.
Nonetheless, LUNAs strong upside move accompanies a decreasing momentum, as illustrated by its weekly relative strength index (RSI), and weakening trading volumes, suggesting bullish exhaustion is close.
Therefore, a pullback from levels near $100 could have LUNA retest its previous resistance-turned-support levels near $75.50 and $50, coinciding with the 0.236 and 0.5 Fib lines, respectively, of the Fibonacci retracement graph attached below.
Double-top risks ofLUNAs price
LUNAs close above its previous record high of around $106 could have it enter unchartered territory with a Fibonacci retracement graph drawn from a $102 swing high to a $45.50 swing low, suggesting an extended upside move toward $138.
Related:Were already buying: Terra founder plans to obtain $10B BTC for reserves
On the other hand, a pullback move from levels near $100 could also trigger the classic double-top setup, which entails two high points in the market, signifying an impending bearishreversal signal. LUNA could paint one in the coming weeks, as shown in the chart below.
In a perfect double top scenario, the Terra token could risk crashing by more than 50% to $44 on the next pullback, followed by a breakout move toward $19.50, also coinciding with LUNAs 50-week exponential moving average (the red wave).
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