New entrants should wait for these bearish signals to play out first

LUNA’s price discovery has not come to a halt just yet, with buyers pushing for a new ATH each day. Offering a weekly and monthly ROI of 30% and 90%, LUNA has become a must-buy for those looking to expand their alt bags. Having said that, the market is not extremely welcoming to new entrants at the moment.

Overbought conditions on the RSI and a bearish crossover on the MACD threaten to trigger a market sell-off before the price cements its value above $100. At the time of writing, LUNA traded at $96.4, down by 2.5% over the last 24 hours.

LUNA 4-hour time frame

Some bearishness has begun to creep into the LUNA market after near-term goals were recently met. For instance, LUNA failed to tag the upper trendline of its ascending channel after bouncing back from its 20-SMA (red) just days ago, something which suggested that bulls were losing strength. The critical region for LUNA now lies between at the confluence of its 100% Fibonacci Extension and 20-SMA (red). Should LUNA weaken below this point, an 11% sell-off could grip the market.

Buyers can look to respond at the 50-SMA (yellow) and 78.6% Fibonacci level. The aforementioned Fibonacci has already staved off a breakdown attempt on 23 December and was LUNA’s best hope for an immediate bullish response. In case sell pressure is not contained above $84, expect another 8% drawdown to the 61.8% Fibonacci level.

Indicators

Although LUNA’s 4-hour Awesome Oscillator and MACD had hit ATH’s, sells-signals had already started to develop. The MACD developed an unfavorable crossover and formed lower highs as opposed to LUNA’s price action. This bearish divergence suggested that the price action was weakening. Similarly, the Awesome Oscillator flashed a sell signal of its own. A bearish twin peak formed over the last 48 hours which indicated that bullish momentum was on a decline.

Conclusion

Based on the abovementioned factors, LUNA was in lieu for a sell-off between 11%-19%. For traders, a safer call would be to wait for bearish tendencies to play out before entering the market. Buy orders can then be placed at $84 or $77, depending on your risk apatite.