The incredible LUNA rally took place amid a flurry of positive and negative developments, while technicals suggest a correction is imminent.
Terra became a controversial blockchain project after the collapse of its own Terra token (LUNA) and stablecoin TerraUSD (UST) in May. But its recent achievements are hard for crypto traders to ignore.
The moon rose from the dead?
LUNA’s September performance is particularly interesting as it is up more than 300% month-to-date after a long period of sideways consolidation.
LUNA/USDT daily chart. Source: Trade View
It is important to note that LUNA is also traded on multiple exchanges under the ticker LUNA2.
Specifically, Terraform Labs, the company behind the Terra project, split the old network into Terra Classic (LUNC) and Terra LUNA 2.0 (LUNA/LUNA2).
See Also: Do Kwon Allegedly Hiring Lawyers In South Korea To Prepare For Terra Inquiry
Terra Classic is the original version of the Terra blockchain, and LUNA 2.0 was developed as part of a regeneration strategy by Do Kwon, founder of Terraform Labs. At the same time, Kwon and his team regularly distribute LUNA2 tokens to users affected by the collapse of Terra.
LUNA/LUNA2 began pumping on September 9th, a day when many things were happening in the Terra ecosystem.
First, Luna Classic (LUNC) has accepted government proposals to impose a 1.2% tax on all its transactions on the network during the day. In other words, the offerings will permanently remove 1.2% of LUNC supply from every transaction on the network, Cointelegraph reports.
Second, FatMan, Terra’s self-proclaimed whistleblower, reported a suspicious transaction worth 435,000 LUNA2 tokens to Binance, claiming that the sender was TerraForm Labs:
“Dinner [and] saw the LUNA2 pump. Checked TFL Dawn wallet. Sure enough, after months of rewards for an airdrop they claim they never received, a few days ago they shipped all 435,000 available LUNA 2 to Binance. It’s just an address.”
However, Do Kwon denied the allegations.
The September 9 pump also came a week after Terra accepted an offer to host a second airdrop of over 19 million LUNA tokens through October 4.
LUNA price technical analysis is bearish
From a technical point of view, the price of LUNA risks a sharp correction in the coming days.
First, the token’s Relative Strength Index (RSI) jumped above 70 on the 4-hour chart, which is considered an overbought area where a correction is more likely. Second, the price has been forming a rising wedge or bearish reversal pattern since September 9th.
Daily LUNA/USDT chart with rising wedge breakout setup. Source: Trade View
Notably, an ascending wedge forms when the price is moving within an ascending range whose upper and lower lines converge. It resolves after the price breaks below the lower trendline along with an increase in trading volume.
On September 11, LUNA tested the lower trendline of its wedge for a possible breakout. In this case, there is a risk that the price will fall to the maximum height of the wedge.
In other words, LUNA could fall as low as $4.50, 30% below the 9/11 price.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every step of investing and trading involves risk, you should do your own research when making a decision.