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LUNA appeared to be nearing an important crossroads on its chart, as a double bottom formed at $33 had the potential to materialise into a rally. A close above the 78.6 percent Fibonacci level would put the bulls in control, allowing for a higher high.
Any cracks in buying pressure, on the other hand, would allow sellers to gain the upper hand, triggering further retracements. LUNA was trading at $34.9 at the time of writing, down 5.5 percent in the previous 24 hours.
LUNA 4-hour Chart
At the time of publication, LUNA had risen by more than 77 percent on the back of a double bottom formed around $25. With selling pressure halting at the 50% Fibonacci level, LUNA was poised for another double bottom breakout. Overall, a 27 percent surge appeared possible, with LUNA retesting the 100 percent Fibonacci level and forming a higher high.
To realise its full potential, LUNA would need to close above the upper range of its value zone. If buying pressure does not remain consistent over the next few days, the 50 percent Fibonacci level is vulnerable to a breakdown. Sellers would benefit from any moves below $26.8; a massive shakedown is possible below $25.
At the time of writing, sellers were outnumbering buyers in the LUNA market. Over the last seven days, the Relative Strength Index has consistently formed lower peaks, indicating waning bullish pressure. As the -DI traded above the +DI, the Directional Movement Index indicated that a downtrend was in effect.
Finally, the Awesome Oscillator fell below the half-line as sellers gained momentum.
The aforementioned indicators were not yet deep in bearish territory, and an immediate reversal was still possible. The 50% Fibonacci level is likely to attract buying pressure and aid in overcoming these bearish developments.
LUNA looked poised to reverse trajectory at the 50% Fibonacci level and ignite a run-up to the $41.5-mark. In order to achieve this outcome, it is imperative for LUNA to close above its value zone of $27-$37.
If sellers respond at the 78.6% Fibonacci level, expect a drawdown to the lower end of the aforementioned range.