Terra’s LUNA has been trending to the downside in the past few days, but different indicators show interesting signs and the next price movements could be fundamental to confirm either an extremely bullish or a bearish signal.
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What Is Boiling Up In LUNA’s Weekly Timeframe?
Unidentified trader used Moving Average Convergence Divergence (MACD) to analyze LUNA’s next possible movements, the weekly chart showed an interesting crossover.
“There is something up $LUNAEach week. The MACD crossover was last time it occurred. $LUNA from $12 to $106.”
MACD crossovers are bullish signals when the MACD (see chart below, blue line) is above the signal (see the yellow lines). An opposite crossover, as shown below in past months, would indicate a bearish signal.
Another pseudonym trader noted that multiple time frames are looking good for the digital coin, which they think could be because a result of “the massive amount of BTC Being bought in order to support stability UST or it could be that the whole market is bubbling up”
“1 hour pointing upwards, 4 and 6 hours are about to print bullishTwist above the Cloud (max bull signal to my mind), 12 hours Charts for daily use look happy enough and will likely look even nicer as Luna presses to all time highs.”
Sharpe Ratio: 4,36
A measure of risk/return that is widely used in finance, the Sharpe Ratio. The Sharpe Ratio, as per Investopedia describes the excess return for volatility that you experience while holding a riskier asset. This helps to determine the right investment decision for you, taking into consideration risk.
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“Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors.
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Higher than 2.0 is considered to be very good.
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An excellent ratio is 3.0 or more
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A ratio under 1.0 is considered sub-optimal.”
Similarly, a pseudonym crypto analyst explained during a Youtube Video analyzing LUNA’s share ratio that, in general, “If you are [the Sharpe ratio] at one, it is a superb result and it means you are crushing the market, you’re beating everything out there,” and LUNA Sharpe ratio is 4.36.
“It’s off the charts positive. This thing is just a beast and there’s many people calling for a $200 Luna in in the near term, but also potentially, $200 Avalanche, $200 SOL. Either way these three are kind of winners right now.”
Sharpe Ratio has its limitations. It can simplify risk, and all volatility, but it is not a perfect tool. Inflated Sharpe Ratios could be misleading, if not the full story of investments was properly addressed.
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Double-Top Possibility
However, if the price moves above the neckline support level, it could trigger a double top. This would be extremely bearish on LUNA.
There are limitations when spotting a double top, and “Basing a double top solely on the formation of two consecutive peaks could lead to a false reading and cause an early exit from a position,” Investopedia explains.
This is not a bearish sign and it will take the next movements to determine if there’s a trend. A failed double top could shoot up LUNA’s price proving previous signs right.
In a different analyst’s opinion, he noticed LUNA’s double top but added that it is still showing a bullish mark structure in the 4-hour timeline.
“There’s a lot of high sell volume coming in, and it looks like there is potentially some type of head and shoulders pattern playing out. But I would be careful shorting this one personally just because I think that usually, you don’t want to short stuff that’s super strong in general.”
The coin is currently in a situation where it could either go up or down by around 50%. Regarding Terra’s ecosystem, it is also important to see how recent developments unfold as they dig into the unknown territory of bitcoin-backed currencies.
At the time this article was written, LUNA has fallen 2.04% to $93,31