LUNA has outperformed almost every top-ranking cryptocurrency this week including Bitcoin despite the market turmoil.
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A rebound rally in the Terra (LUNA) market this week risks exhaustion as the price retests a key trendline for a potential pullback.
Descending channel risks LUNA decline
LUNA has been trending lower inside a falling channel—made up of two parallel descending trendlines—since December 2021. In doing so, the Terra token typically tests the lower trendline as support for a rebound to the upper trendline, as shown in the chart below.
Similarly, a pullback from the upper trendline sends the price to the lower trendline. For now, LUNA looks poised to repeat the correction move, taking further cues from its daily relative strength index that now treads near its overbought reading of 70 — a sell indicator.
If the pullback occurs, the price would risk dropping to its interim downside target near $52, coinciding with the 0.5 Fib line of the Fibonacci retracement graph drawn from $4-swing low to $100-swing high.
If an extended correction occurs, LUNA could retest $40, a 0.618 Fib line that comes closest to the falling channel’s lower trendline.
LUNA best performer this week so far
The short-term bearish outlook appears after Terra’s 45% price rally to around $68 this week, its best level since Jan. 25. Interestingly, LUNA/USD went higher despite a gloomy outlook elsewhere in the crypto market, led by the Russian military’s invasion of Ukraine that dampened investors’ risk-on sentiments.
The next-best performing token this week among the top cryptos has been Cardano (ADA). Interestingly, ADA’s week-to-date returns sit near 6% below zero, meaning LUNA has been outperforming its nearest rivals, including Bitcoin (BTC) and Ether (ETH), by a wide percentage margin in the said period.
LUNA’s superior performance appeared partly due to the news surrounding the $1 billion raised to establish a Bitcoin reserve for Terra’s stablecoin UST. Additionally, Anchor Protocol (ANC), which recently received a $450 million UST from the Luna Foundation Guard (LFG), rose by nearly 70% under Terra’s shadow.
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