LUNA Price Outlook: Is Recovery Possible After a 20% Drop from Monday's Peak?

Summary:
Terra (LUNA) experienced a notable decline of 20.1% starting Monday, stabilizing at $0.127 early Tuesday. Although it briefly bounced back between $0.127 and $0.135, bullish momentum appears to have waned. The coin's ability to maintain above key support levels will determine its short-term recovery potential.

Key Takeaways

LUNA's price dropped 20.1% since Monday, currently trading around $0.13.
Technical analysis suggests a bullish structure on the 3-day chart despite a bearish trend since May 2022.
Short-term bearish pressure is evident, particularly as LUNA struggles to reclaim key support levels.
Traders are advised to monitor LUNA's ability to hold at $0.13 before making further decisions.

LUNA slides 20% from Monday's high, bulls fight to defend $0.13 support

LUNA's Price Movement and Current Status

LUNA’s price fell sharply by 20.1% beginning on Monday, reaching a low of $0.127 early Tuesday. Since then, it has fluctuated between $0.127 and $0.135, settling at about $0.13 during this update. Previously, AMBCrypto had mentioned that LUNA presented a favorable buying opportunity as it had protected the $0.15-$0.16 demand zone the week prior, but expectations for a bullish surge have since diminished following the latest downturn.

LUNA 3-day Chart

Where is LUNA Heading Next?

Analyzing the 3-day chart indicates a bullish structure for LUNA. The long-term trend remains bearish since May 2022, although there have been moments when LUNA’s price briefly shifted to a bullish trend. Unfortunately, it has struggled to sustain any breakout for an extended duration. While it seems unlikely LUNA will reach its former heights of $80 or $100 seen before the Terra crash, traders can still capitalize on short-term market movements.

A break past the $0.168 local high from mid-September contributed to LUNA’s bullish market structure. This development opens the door for potential rallies towards previous swing highs. The significant uptick in the On-Balance Volume (OBV) and increased trading volume in December highlight strong activity driving the recent price movements.

LUNA 4-hour Chart

Short-term Bearish Sentiment

The 4-hour chart indicates that LUNA bulls are barely holding at the 78.6% Fibonacci retracement level of $0.13. Furthermore, the support zone between $0.15 and $0.18 has also been given up to bearish forces following recent market volatility. These trends suggest increasing bearish pressure in the short term, corroborated by the bearish stance indicated on the H4 chart.

Less Likely Paths for LUNA

Based on the structures observed in both the 1-day and 3-day charts, maintaining a bullish perspective is reasonable. LUNA must reclaim critical support levels, such as $0.155, to regain ground lost over the past week. However, it's essential to note that Bitcoin’s (BTC) performance has also been bearish, and a breakthrough past $94k could infuse some bullish sentiment. Until such a breakout occurs, the optimistic recovery scenarios for LUNA towards $0.20 and $0.24 appear to be less likely.

Should Traders Consider a Bearish Stance on LUNA?

In short, yes. LUNA has repeatedly attempted bullish structure breaks on the 1-day and 3-day charts but has failed to maintain them. The last bullish shift, bolstered by increased trading volume, may have led some traders to expect a recovery. Those considering short positions might want to watch for a few more days to see if LUNA can defend the $0.13 support and reclaim the former support at $0.155.

Final Thoughts

Disclaimer: The information provided in this article should not be considered financial, investment, or trading advice and reflects only the writer’s opinion.