LUNC’s Risk-Reward Ratio: Should Investors Take a Chance?

• LUNC’s weekly chart review suggests a healthy Risk-Reward ratio.
• Investors use the Risk-Reward ratio to gauge an asset’s potential profitability.
• LUNC has a Risk-Reward ratio of 1:15.

A weekly chart analysis of Terra Luna Classic (LUNC) suggests a favorable risk-reward ratio that may entice crypto investors looking to capitalize on a potential price surge. The altcoin is currently trading near its lowest price ever, indicating a greater potential for upward movement compared to further downside risk.

Reviewing LUNC’s historical price action shows the gap between the altcoin’s current price and its all-time high is much. Users would see at a glance that there is more room for an upward surge should LUNC embark on a bull run. Compared to a potential drop towards its lowest-ever price.

LUNC/USD Weekly Chart on TradingView

How to Calculate the Risk-Reward Ratio

It is worth noting that the Risk-Reward ratio of any asset is an essential tool investors adopt when gauging the viability of an investment. To calculate the Risk-Reward ratio of an investment, investors divide the amount they stand to lose should the price of an asset move opposite their preferred direction by the amount of profit they expect to make from the trade.

Meanwhile, the investors determine the projected profit or loss amounts from their profit targets and stop-loss positions. Subsequently, multiple factors determine the extent of these targets, the most crucial of which is the previous price behavior of the assets.

Focusing on LUNC, historical data shows an all-time low (ATL) price of $0.000035000 and an all-time high (ATH) of $0.000770000. Therefore, trading for $0.000078625 shows a higher potential for LUNC’s price should the altcoin aim for retesting its ATH compared with heading toward the ATL.

Read also: Terraform Labs’ Bankruptcy Hearing: Impact on LUNA, LUNC, USTC Prices

LUNC Has a 1:15 Risk-Reward Ratio

Using the formula explained above, LUNC’s historical price action compared to its price at the time of writing reflects a Risk-Reward ratio of over 1:15, making it a potentially profitable trade for those wishing to invest in the altcoin. However, there are notable resistance levels between LUNC’s current price and the ATH. Such levels could be significant in the altcoin’s future price development.

Meanwhile, it is crucial to note that an altcoin’s price performance is not solely dependent on its technical outlook. Other fundamental factors could play a role in every asset’s price movement. For instance, LUNC’s historical setback because of its link with the embattled Terraform Labs has significantly affected its development. Hence, investors seeking to profit from the altcoin need to combine the technical structure with ongoing developments within the altcoin’s ecosystem for better analysis.