Terra (LUNA) was one of the top performers of the week despite the market turmoil. However, this may not last as it re-tests the main trendline for a possible pullback.

Risk of LUNA in the descending channel

LUNA has been trending down within a descending channel composed of two parallel descending trend lines since December 2021. In doing so, it often tests the lower trendline to support the movement on the chart below.

 Source: TradingView

Similarly, a pullback from the upper trendline will push price down to the lower trendline. For now, Terra seems poised to repeat the correction and close in on other signals from the daily Relative Strength Index (RSI), which is currently nearing the overbought level of 70, a selling indicator.

If there is a pullback, Terra risks falling near $52, which coincides with the 0.5 Fib line of the Fibonacci retracement chart being drawn from $4 to $100.

If a correction lasts longer, LUNA may retest at $40, the 0.618 Fib line near the lower trendline of the falling channel.

LUNA works best during the week

The near-term bearish outlook follows Terra’s 45 percent rally to around $68 this week, its best since Jan. 25. Interestingly, despite the overall gloomy outlook, it has risen in Ukraine, reducing investors’ risk appetite.

The second best altcoin of the week is Cardano (ADA). Interestingly, ADA’s weekly return is almost -6%, meaning that LUNA has outperformed its closest competitors, including Bitcoin (BTC) and Ether (ETH), by a large percentage over the aforementioned period.

 Source: Messari

LUNA’s stellar performance is due in part to news of a $1 billion fund being raised to set up a bitcoin reserve for Terra’s stablecoin UST. Additionally, Anchor Protocol (ANC), which recently received $450 million in UST from Luna Foundation Guard (LFG), has grown nearly 70% in the shadow of Terra.

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