In less than 24 hours Luna price was at a weekly low of $75.50 but as of now it has hit $90 and drop back off but still prime to break out. Why is that? How could we predict such price actions in the future?
Capitulation
For over the past couple of week Luna has been falling from an all time high close to $120. The drop in price has been steep and steady. As of last night when Luna broke down from $80 it immediately drop even more. Yet something happened during last night breakdown of $80 that did not happen in previous price breakdowns during the past two weeks.
The volume of Luna being traded while the price broke down of $80 had resin. This is shown from only one trading exchange but imagine all of the exchanges trading Luna was like that it shows that sellers are exhausting.
Over on Binance we can see the LUNA : USDT trading pair and see how Luna overnight had been gaining a lot of volume. This has lead to the selling price exhausted and with little to no sellers left the buyers stepped in and push prices up.
RSI hit a low of 30
Over on Kucoin with a 4 hour chart of Luna we can see less than 24 hours ago that price was hitting a low RSI of 30. Often when RSI is at 30 or below it is signalling the asset is over sold. Indeed within 12 hours Luna had turn the switch from bearish to bullish in price. However worth mentioning there was hint that tides were changing even before the price actually took off. RSI was one of those indicators.
Shorts Squeeze
Price movement going up was rapid and it came with some perpetual swaps. For instance on Binance the exchange allows traders to trade on margin up to 20x of Luna leverage. Those who were short Luna into the $75s were pushing their luck as there was enough buyers to hold the price and in turn flip it all bullish.
This force short sellers to cover and in some instances likely fuel the buying of Luna which only accelerated prices to the upside.
Conclusions
I do not usually talk about technical analyzes on cryptocurrency because to me I prefer to just buy in what I believe in and hold long term. Yet today's visible change in Luna price was clear and beautiful in the parts of bulls to not ignore.
I will end the post by showing Luna is now 8th overall in market cap just in the past 24 hours of price movement. In fact it was really 16 hours that took Luna to go from 9th to 8th. It is now setting its sights on #7 in Solana as it is less than $2.5 billion between the two.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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