Disclaimer: The results of the following analysis are the sole opinion of the author and should not be considered as investment advice

In the previous rally, the bulls broke through multiple price caps and made exponential gains as Terra (LUNA) reached its life milestone on Dec. 27. Since then, the last five weeks have caused LUNA to enter a correction phase while it lost 23.6% and 38.2% Fibonacci support levels.

From here until buyers can step in to recover the $54 mark, the long-term bullish trend line will hinder any recovery attempts by the bulls. The 61.8% support level is an important milestone for a decisive trend in the coming days. At press time, LUNA was trading at $48.07, down 9.96% in the last 24 hours.

LUNA Daily Chart

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Source: TradingView, LUNA/USDT

Since its new high, the alt has fallen 58.28% in just 35 days after surging up a month on Jan. 31. As a result, it broke the six-month-long bullish trend line support (yellow) and turned it into direct resistance.

In this retracement phase, the 20 SMA (red) and 50 SMA (cyan) are showing a bearish crossover after almost six months. This reading reaffirms the bearish dynamics.

As alt forms a falling wedge on its daily chart (reversal pattern, yellow), a possible retest of the $54 resistance level is reasonable. Moreover, the levels of $43.2 (61.8% Fibonacci) and $38.5 remain key ranges for buyers to defend. Failing that, it could see the start of a sharp downtrend.

Fundamentals

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Source: TradingView, LUNA/USDT

The RSI fell sharply after hitting an 8-month low on Jan. 31. Looking ahead, it is likely to see a near-term recovery. Most importantly, the AO is flashing a green bar, suggesting a slight decline in selling power.

However, the +DI and -DI lines do not show any improvement. Therefore, the possibility of testing the LUNA gold support before the reversal cannot be abandoned.

Conclusion

Keeping in mind its daily oversold RSI readings and the formation of a reversal pattern, LUNA's chances of retesting the $54 mark remain bright in the coming days. That said, investors/traders must pay close attention to the broader sentiment affecting alt perceptions.