Akash Girimath
FXStreet
Terra (LUNA) price has been on a tear as it more than doubled over the past week. While this ascent is impressive, a correction should be around the corner as investors rush to book profits.
Terra price rose 158% since August 9 and roughly 100% since August 16 as it set up a new all-time high at $33.50. This run-up is similar to what Solana price experienced in a roughly equal time frame.
While impressive, this upswing is doomed to correct as the Momentum Reversal Indicator (MRI) has flashed a sell signal in the form of a red ‘one’ candlestick on the 1-day chart. This technical formation forecasts a one-to-four candlestick correction.
Therefore, market participants should keep a close eye on a 15% retracement to the immediate support level at $27.46, coinciding with the 127.2% Fibonacci extension level.
If the selling pressure continues to build around this barrier, another 15% correction can be expected to $22.41, just below the midpoint of the ascent from August 9.
LUNA/USDT 1-day chart
On the flip side, things could switch up if LUNA price consolidates and prepares for a new leg-up. The bearish thesis will face invalidation if Terra price starts an uptrend and produces a decisive daily candlestick close above $33.88, coinciding with the 161.8% Fibonacci extension level.
In such a case, there is a high chance LUNA might try to tag the 200% Fibonacci extension level at $40.98.
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