The incredible LUNA rally came amid a flurry of positive and negative developments, while the technical data suggests an imminent correction.
Terra became a controversial blockchain project after the collapse of its own Terra token (LUNA) and stablecoin TerraUSD (UST) in May. But recent successes for crypto traders are hard to ignore.
The moon has risen from the dead?
LUNA’s September results are particularly interesting as they are up more than 300% since the start of the month after a long period of sideways consolidation.
LUNA/USDT daily chart. Source: Trading View
It is important to note that LUNA is also traded on several 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 reportedly hires lawyers in South Korea to prepare for Terra investigation
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 dump LUNA2 tokens to users affected by the collapse of Terra.
LUNA/LUNA2 started pumping on September 9th, a day when a lot of things happened in the Terra ecosystem.
First, Luna Classic (LUNC) has accepted management proposals to impose a 1.2% tax on all of its transactions on the network on the same day. In other words, the offers will permanently remove 1.2% of the LUNC offer from every transaction on the network, according to Cointelegraph.
Secondly, self-proclaimed Terra whistleblower FatMan reported a suspicious transaction worth 435,000 LUNA2 tokens to Binance, claiming that TerraForm Labs was the sender:
“I had lunch [and] saw LUNA2 pumping. I checked the TFL Dawn wallet. Of course, after months of farm rewards and an airdrop they claim they never received, just a few days ago they sent all 435,000 available LUNA 2s to Binance. It’s just an address.”
However, Do Kwon denied the allegations.
The September 9th pump also came a week after Terra approved a proposal to complete the second airdrop of over 19 million LUNA tokens by October 4th.
LUNA price specifications are bearish
From a technical point of view, the price of LUNA risks a strong 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 zone where a correction is more likely. Secondly, since September 9, the price has been forming a rising wedge or bearish reversal pattern.
Daily LUNA/USDT chart with rising wedge breakout setup. Source: Trading View
Specifically, a rising wedge forms when price action gets higher in an uptrend where the upper and lower trendlines 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.
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