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Terra (LUNA) could decline to just over $25 per token in the coming weeks.
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Stringent monetary policies have begun to weigh on risk assets after a period of easing.
The price of LUNA faces downside risk, but analysts expect a potential rebound if the cryptocurrency tests a long-established trendline for support. In a technical assessment, experts suggest that Terra (LUNA) may drop to roughly $25 per token in the near term as a head-and-shoulders (H&S) pattern develops, implying a possible 50% decline.
An H&S pattern forms when price creates three consecutive peaks, with the middle peak (the “head”) higher than the two outer peaks (the “left” and “right” shoulders). The “neckline” is the horizontal or sloping support level that links the troughs between those peaks.
When price breaks below the H&S neckline, traders typically consider initiating short positions. Some traders follow a “two-day” confirmation rule, waiting for a retest of the neckline where prior support flips to resistance before entering shorts.
Source – TradingView
In classic H&S targets, the expected move after a confirmed breakout often equals the vertical distance between the head and the neckline. As shown in the chart, LUNA’s price appears to be tracking toward that H&S short target, which would bring it near $25.
Macroeconomic headwinds are pressuring LUNA’s price action
Historically, LUNA’s downtrends have tended to find support near its 50-week simple moving average during its brief history as an investable asset. At the time of writing, that support level sits around $30.
On the daily timeframe, LUNA has also tested its 200-day exponential moving average (200-day EMA), which traders often watch for signs of a trend reversal. If LUNA holds the 200-day EMA and rebounds, the next upside target shown on the chart would be in the vicinity of $75.
Conversely, a decisive break and sustained trading below the 200-day EMA could complete the H&S breakdown and propel LUNA toward the $25 target.