4 May 2021 (SUN)- Terra (LUNA) Daily Risk Report

4 May 2021 (SUN)- Terra (LUNA) Daily Risk Report


Investment Disclaimer:

  • I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.
  • Past performance presented here is not an indicator of future performance.
  • This post expresses my own opinion about the cryptocurrency mentioned herein and is not an offer to buy or sell, or a solicitation of any offer to buy or sell the cryptocurrency mentioned in this post. 

1. How Terra Performs Relative to Other Cryptos ?

3f91291efbf8da89ef96625d5f9ae95b09597ca2e9a7dd0555c48b53cc45da5c.jpg

As of 04 May 2021, Terra has made a cumulative return of 3945.53% since Jan 2020 and 2626.7%  since Jan 2021. It is currently the 2nd greatest performing crypto asset since Jan 2021 as compared to the other cryptocurrencies presented above.

3. Technical Analysis on Terra

3.1. Volume Weighted Average Price (VWAP)

63e1a605d79aa48b71d6f9c8b8ec5dbb0ad7a7e0a337d3976e5b311d45f6eea3.jpg

VWAP is a technical indicator used by a trader to gauge the overall trend of an asset price movement. VWAP line (orange line) represents the volume-weighted average price (average price here is defined as the average of high, low and close prices) while close price line (blue line) represents the price when LUNA is closed at the end of every single day. 

Whenever blue line (close price) is above orange line (VWAP), it indicates that the asset is gaining momentum and being traded higher than its average price level. This would represent a 'buy' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'sell' opportunity, anticipating that the price of LUNA (blue line) to fall to its average level (orange line).

Whenever blue line (close price) is below orange line (VWAP), it indicates that the asset is losing momentum and being traded lower than its average price level. This would represent a 'sell' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'buy' opportunity, anticipating that the price of LUNA (blue line) to rise to its average level (orange line).

As of 04 May 2021, VWAP is suggesting that LUNA is trending downwards and currently trading below its average price range of USD 17.20 to USD 17.50 per LUNA.

3.2. Moving Average Convergence Divergence (MACD)
0282d6f6833251d8cbedb29986760ba30df9663757313b1b1248d7aa225f79b1.jpg

MACD is often used by trader as a momentum indicator. There are 2 lines that form the above charts, namely MACD (12, 26) lines and Signal(9) line, while the histogram is calculated by subtracting Signal (9) from MACD (12,26). Histogram would fall to the negative territory whenever MACD (12, 26) is trending at a lower level than Signal (9) and rise to the positive territory whenever MACD (12,26) is trending at a higher level than Signal (9).

MACD (12, 26) is computed by subtracting the 26-day exponential moving average (EMA) of LUNA closing price from its 12-day EMA. 
Signal (9) on the other hand is calculated as the 9-day EMA of MACD (12,26). 

As MACD (12, 26) goes higher away from Signal (9), it signifies that LUNA is gaining momentum and whenever it goes trends at a lower level than Signal (9),it signifies that LUNA is losing momentum. 

As of 04 May 2021, MACD is suggesting that LUNA is gaining momentum.

3.3. Bollinger Band

41763fd68048dd7431dc607963513b03d2ce5fdb49d3a351882d592ea7e41def.jpg

Bollinger band is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. Its chart made up of 4 lines, namely:

- SMA (20) (blue line), which is the 20-day simple moving average price of LUNA
- Upper Band (orange line), which is computed by adding 2 standard deviations of LUNA on SMA (20)
- Lower Band (red line) , which is computed by subtracting 2 standard deviations of LUNA from SMA (20)
- Close (green line), which is the daily closing price of LUNA

Whenever close line (green) touches the lower band (red), it indicates that LUNA is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever close line (green) touches the upper band (orange), it indicates that LUNA is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 04 May 2021, Bollinger Band is suggesting that LUNA is trading at its fair value (i.e. neither overbought nor oversold).

3.4. Relative Strength Index (RSI)

6d337653a2ad0e4af00ff71b8142ad6bf33d070cefed63571de51c3e6951dbd6.jpg

Just like Bollinger Band, Relative Strength Index is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. There are 2 psychological levels, i.e. 30 and 70 in RSI. Whenever the RSI reaches 30, it indicates that LUNA is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever RSI reaches 70, it indicates that LUNA is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 04 May 2021, RSI is suggesting that LUNA is trading at its fair value (i.e. neither overbought nor oversold).

Based on the technical analysis presented above, quantdoge holds a neutral stance on the short-term price outlook of LUNA, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

4. Terra Risk Profile

30a250d2ed3f71c9eac73db5e04a36068fcaf7bee6781b137ade719d5d69c4d2.jpg

a39ac207362e1b1775ced2ae5aa7c22805af24aafd6a9fc0cb9d18932801da30.jpg

Based on the 100-day 95% historical Value-at-Risk (VaR) profile of Terra defined above, LUNA seems to trade at a higher risk level on 04 May 2021 as compared to 10 days before on 24 Apr 2021, with its biggest pullback being seen at 13.12% on a single day during the last 100 days. However, I could be wrong, hence please make your careful due diligence before making any financial decision.

5. Price Simulation for Terra

398bf08c73b4a30e4deaafe5e43dea1721e21418c503f638d9f5d9ca66b2b59a.jpg

1124498266f8f85183292ad48b80a673c0007f06812135fcb8b1d6b88c910e6d.jpg

9a104d450c133ed0b4706da7240e6c0e403ee1f0bf9520555eeab1ee03413eae.jpg

How did quantdoge simulation perform vs the actual LUNA price movement over the last week ?

4d83f6710722550e34801ec8b0110178a7c3355b1b9b6b0c10edf7ed69f00d20.jpg

Over the last 7 days, LUNA has been trading near the 50% price range of quantdoge simulations, indicating that LUNA was trading near at its fair value level over the last week.

bbb490509404f52574bb237001fb309f0f948373a03b24b7ea28e24b24747573.png

Are you looking for a crypto wallet which offers you an easy way to securely store your crypto while giving you the ability to earn crypto? Look no further than Coinbase, the cryptocurrency exchange and custody which has just went public in NASDAQ this month. You would get around USD 10 worth of free bitcoin if you sign up with my referral link below: 

https://www.coinbase.com/join/lim_2kx

Besides, you would also be able to earn free cryptocurrencies via Coinbase Earn program where you need to do is just complete a series of short lessons about different cryptos. 

If you are into Polkadot (DOT) and Bitcoin (BTC), I have made similar analysis on them at:

If you like my analysis and articles, please follow me at @quantdoge for daily updates. 

 

 

 

 

 

 


quantdoge
quantdoge

Data scientist in crypto and blockchain space.


Daily Crypto Risk Report
Daily Crypto Risk Report

This blog was created by quantdoge, a data scientist in the cryptocurrency and blockchain space to publish daily risk reports on different cryptocurrencies. All published reports in this blog were analyzed with in-house algorithmic trading and quantitative risk management technology. ** Investment disclaimer: ** I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.