LUNA to peak 80%? This is what analysts think

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Terra’s LUNA has been on the downside for the past few days, but several indicators are showing interesting signs and the following price moves could be fundamental to confirm either an extremely bullish or bearish signal.

Related literature | LUNA Sees 17% Loss In One Week, UST De-Peg Rumors Affect Price?

What’s cooking in LUNA’s weekly time frame?

When an anonymous trader used Moving Average Convergence Divergence (MACD) to analyze the next possible moves of LUNA, the weekly chart showed an interesting crossover.

There is something going on $LUNA weekly time frame. The last time the MACD crossover happened, it was sent $LUNA from $12 to $106.”

A MACD crossover can give a bullish signal when the MACD (see the blue line in the chart below) rises above the signal line (see the yellow line). The opposite crossover would send a bearish signal, which can also be seen as an example below from previous months.

LUNA’s MACD Crossovers Overtime | LUNAUSD on TradingView.com

Another pseudonymous trader noted that multiple time frames look good for the digital currency, which they say could be due to “the sheer amount of BTC is bought to help support stable UST or it could be that the whole market is bubbling up”

“1 o’clock is pointing up, 4 and 6 o’clock are about to print bullish spin above the cloud (maximum bull signal in my mind), 12 hours and daily charts look happy enough and will probably look even more beautiful as Luna pushes to all time highs.”

4.36 Sharpe ratio

The Sharpe ratio is a risk-return measure that is widely used in the financial world. According to Investopedia, the Ratio describes how much extra return you receive for the extra volatility you endure for holding a riskier asset, determining the investment choice that will yield the highest return, taking risks into account.

“Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors.

A ratio higher than 2.0 is considered very good.

A ratio of 3.0 or higher is considered excellent.

A ratio below 1.0 is considered sub-optimal.”

Similarly, during a YouTube video analyzing LUNA’s stock ratio, a pseudonymous crypto analyst explained that, in general, “If you [the Sharpe ratio] first, it’s a fantastic result and it means you’re crushing the market, you’re beating everything out there,” and the LUNA Sharpe ratio is 4.36.

“It’s positive off the charts. This thing is just a beast and there are a lot of people asking for a $200 Luna on short notice, but possibly also $200 Avalanche, $200 SOL. Anyway, these three are sort of winners right now.”

However, there are limitations when using Sharpe Ratio as it can make the risk too easy and treat all volatility as the same. Some inflated Sharpe ratios can turn out to be misleading if the whole investment story was not handled correctly.

Related literature | What’s Behind LUNA’s Rally Could Price Detach From Bitcoin?

Possible double top

On the downside, there is a possibility of a double top that could be triggered if the price breaks out of the neckline of the support level. This would be extremely bearish for LUNA.

LUNAUSD 4 hour time frame on TradingView.com

There are limitations when spotting a double top, and “If a double top is based solely on the formation of two consecutive peaks, it could lead to an erroneous reading and cause an early exit from a position,” explains Investopedia.

For this reason, this is not a confirmed bearish signal and the following moves will be vital to identify a potential trend. A failed double top could rocket the price of LUNA, proving that previous signals were correct.

In the opinion of another analyst, he noted the double top of LUNA but added that it still shows bullish mark structure in the 4 hour timeline.

“There’s a lot of high volume sales coming in and it looks like there may be some sort of head-and-shoulder pattern at play. But I’d personally be careful about shorting this one just because I don’t think you normally want to short-circuit stuff that’s about it.” generally super strong.

At the moment it seems that the currency could go either way: a huge spike or a crash of around 50%. With regard to Terra’s ecosystem, it’s also important to watch recent developments unfold as they dig into the uncharted territory of bitcoin-backed currencies.

At the time of writing, LUNA is down 2.04% over the course of the day to $93.31.

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