Terra's LUNA2 skyrockets 70% in nine days despite persistent sell-off risks
The price of Terra (LUNA2) has recovered sharply nine days after falling to its historic lows of $1.62.
On June 27, LUNA2's rate reached $2.77 per token, thus chalking up a 70% recovery when measured from the said low. Still, the token traded 77.35% lower than its record high of $12.24, set on May 30.
LUNA2's recovery mirrored similar retracement moves elsewhere in the crypto industry with top crypto assets Bitcoin (BTC) and Ether (ETH) rising by approximately 25% and 45% in the same period.
The recent bout of buying in the LUNA2 market could trap bulls, given it has come as a part of a broader correction trend.
In detail, LUNA2 appears to be forming a "bear flag" pattern, a bearish continuation setup that appears as the price consolidates upward inside a parallel ascending channel after undergoing a large move downside.
Bear Flags resolve after the price breaks below the channel's lower trendline. As a rule of technical analysis, their breakdown takes the price to the level at a length equal to the size of the previous downside move (called "flagpole"), as shown in the chart below.
LUNA2, now trading near its Bear Flag's upper trendline (~$2.40), could undergo an imminent pullback toward the pattern's lower trendline near $2.
If accompanied by an increase in volume, an extended price correction would put LUNA2 at risk of crashing to $1.30, down almost 50% from June 2's price.
LUNA's depressive technical outlook also takes cues from its controversial history.
Notably, LUNA2 came to existence in late May as a means to compensate investors who had suffered losses during the collapse of Terra's algorithmic stablecoin, now called TerraClassic USD (USTC).
Meanwhile, the almost-worthless old version of LUNA2, named LUNA, started
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