Crypto market is bleeding. This means that it’s an ideal time for a breakout to occur. What will be the catalyst? Terra (LUNA) has been consolidating in a bullish pattern, and a hidden bullish RSI divergence supports the prognosis of a breakout from this Ascending Triangle Pattern.
- Stablecoin issuance platform Terra’s governance token LUNA faced a breakout from a bullish pattern it formed 6 weeks ago.
- A hidden bullish relative strength index (RSI) divergence supports the prognosis.
- Terra’s bullish break would come against the bleeding crypto market.
YEREVAN (CoinChapter.com) – Terra (LUNA) changed hands at $78.2 in Wednesday’s European session. However, after stagnating for two days, the price action looks poised for a breakout. The digital asset formed two patterns with a mutual support line: an Ascending Channel and an Ascending Triangle.
The Ascending Channel features two parallel trendlines that enclose the price action and prevent sharp breaks in either direction. The resistance trendline has been instrumental since mid-October 2021, and LUNA token could take off to retest it again or break out in the upcoming weeks.
Moreover, the token came close to the support/resistance bar that served as an upper trendline for the Ascending Triangle. In hindsight, unlike the Channel, which is neutral, the Ascending Triangle is a bullish setup that signifies an accumulation period before a new leg up.
Thus, LUNA price could gain up to 80% and reach at least $130.0-140.0 in the upcoming weeks, and the hidden RSI divergence supports the forecast.
In detail, the relative strength index is a momentum indicator. It reflects how the traders perceive a token’s future and return capabilities. The RSI graph (purple on the chart above) typically mimics the price action. However, occasionally it can deviate from the token’s direction, hinting at a bullish or bearish future.
LUNA’s RSI formed a so-called hidden bullish divergence. When the price action registers higher lows, the RSI paints lower lows. The RSI divergence supports the bullish claim.
Declining crypto market
Terra’s upcoming break would add some green candles amid the bleeding charts. Bitcoin (BTC), the leading cryptocurrency that accounts for 41.7% of the total crypto market cap, dropped 38.9% from its ATH of $69,000. The flagship crypto traded at $42,006 on Jan 19, barely keeping its head above the $40,000 margin.
The crypto market as a whole followed suit and declined 34.6% and went from $3 trillion on Nov 10 to $1.96 trillion on Jan 19.
In the previous 24 hours, all cryptocurrencies in the top 10, moved sideways. Bitcoin stalled, with a 0.4% nominal uptrend, and Ethereum (ETH) lost 1.6%. Other large coins like Cardano (ADA), Ripple (XRP), Binance Coin (BNB), and Solana (SOL) stalled as well, not making any progress.