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