A technical pattern that preceded an 80% price rise in the Terra (LUNA) market in August 2021 has reappeared.
LUNA Paints a Bullish MACD Crossover
The technical setup involves a so-called “signal line crossover” between LUNA’s weekly MACD line – equal to the difference between the token’s 12- and 26-week moving averages (MA) – and the nine-week MA called the signal line, drawn above the zero line, as shown in the table below.
Together, these lines represent the Moving Average Convergence Divergence (MACD), a momentum oscillator for determining the direction and momentum of a market.
So, if the MACD line crosses above the signal line, the markets interpret it as a bullish MACD crossover. Conversely, a bearish MACD crossover occurs when the MACD line breaks below the signal line.
LUNA’s weekly MACD line closed above its signal line earlier this month, raising speculation of strong bullish momentum ahead. For example, independent market analysts Argonauts cited a similar August 2021 bullish crossover that occurred before the token’s 80% price rise – from $12 to $102.
Something is happening $LUNA weekly deadline. The last time the MACD crossover happened, it sent $LUNA from $12 to $106. #moon #nfa pic.twitter.com/9TYyGmp88j
— Argonauts (@terra_hodler) March 20, 2022
Bearish Divergence Detected
The MACD-based bullish outlook on the Terra market also stems from the incredible price performance of LUNA over the past 30 days.
Notably, the price of LUNA jumped nearly 90% after hitting a low of $47.25 on Feb. 20, now eyeing a rally above $100.
Nonetheless, LUNA’s strong bullish move is accompanied by waning momentum, as illustrated by its weekly Relative Strength Index (RSI) and weakening trading volumes, suggesting that bullish exhaustion is near.
Therefore, a pullback from levels near $100 could cause LUNA to retest its resistance-turned-support levels near $75.50 and $50, coinciding with the 0.236 and 0.5 Fib lines, respectively. , of the Fibonacci retracement chart attached below.
Dual Risks of LUNA Price
LUNA’s close above its previous high of around $106 could send it into uncharted territory with a Fibonacci retracement chart taken from a high of $102 to a low of $45.50 suggesting movement extended bullish towards $138.
Related: ‘We’re Already Buying’: Terra Founder Plans to Get $10 Billion BTC for Reserves
On the other hand, a pullback from levels near $100 could also trigger the classic double top setup, which involves two highs in the market, signifying an impending bearish reversal 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 more than 50% to $44 on the next pullback, followed by a breakout move towards $19.50, also coinciding with the LUNA’s 50-week exponential moving average (the red wave).
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