(Akash Girimath – FXStreet)
– LUNA price is retracing after creating a liquidity pool resting above $2.21.
– A bounce off the support level at $1.80 or $1.60 could trigger an explosive move to $2.80.
– A daily candlestick close below the August 29 swing low at $1.50 without a quick recovery above $1.60 will invalidate the bullish thesis for Terra.
LUNA price action has been clockwork and shows no signs of breaking this trend. The recent upswing created a blow-off top and an accumulation of buy-stops, aka liquidity above a crucial level. Therefore, investors can expect the ongoing retracement to result in a sudden burst in buying pressure, leading to an explosive move.
LUNA price prepares for an uptrend
LUNA price rallied 47% between August 29 and September 1; this move came after collecting the sell-stop liquidity resting below the August 19 swing low at $1.92. This liquidity sweep was a buy signal for sidelined traders.
The aforementioned rally set a swing high at $2.21, making it one of the multiple swing highs at this level, indicating a collection of short-stops, aka buy-stops. The next objective for market makers is to collect the liquidity resting here.
Hence, investors must wait for one of two things to happen to enter a long position.
- A bounce off the $1.80 or $1.60 support levels.
- Or a sweep of the $1.50 swing low, followed by a quick recovery above $1.60.
Regardless of which outlook occurs, the target for LUNA price is $2.21 and the buy-stop liquidity present above it. However, if the momentum is strong enough, Terra bulls could push the altcoin to reach the $2.80 level.
This move would represent a 74% gain from $1.60 and is likely where the upside is capped for Terra.
On the other hand, if LUNA price dips below $1.50 but fails to recover above $1.60 in a swift manner, it will signal a weakness among buyers and invalidate the bullish narrative. This development could see LUNA price revisit the $1.45 and $1.40 support levels.