Analyzing why Shiba Inu crypto’s latest breakout is somewhat subdued
Strong gains could give way to something else soon.
The memecoin market has gained by 5% over the week, compared to Bitcoin’s [BTC] 1.40% and Ethereum’s [ETH] 2.04%. Layer 2 tokens have performed the best though, with 20.7% gains over the same time period.
Dogecoin [DOGE] often sets the direction for the memecoin sector. At press time, it was up 4.50% in 24 hours and up 2.03% over the last 7 days.
What about SHIB though? Well, Shiba Inu [SHIB] has performed slightly better than DOGE. As the second-largest memecoin by market cap, SHIB was up 5.78% in a day and 6.37% in a week.
Hence, the question: How will the memecoin trend for the rest of September?
Shiba Inu’s downtrend might be weakening
On the 1-day chart, the swift decline from May to July marked a bearish swing move for Shiba Inu. Since then, the token has picked up some bullish momentum though.
In recent weeks, the MFI has hovered around neutral-50 for the most part. All while the CMF climbed above +0.05 in late August and early September to show sizeable capital inflows.
The technical indicators showed a potential short-term uptrend, but there’s another reason why swing traders need to be prepared for a bullish trend shift in the higher timeframes.
SHIB tested the 78.6% Fibonacci retracement level at $0.00000613 in August and faced rejection. Since then, the memecoin has defended the $0.00000495 support level twice.
Sellers’ inability to break this short-term support could be a sign of weakness. However, a bullish follow-through will need sustained demand and positive memecoin market sentiment to keep the move going.
Traders’ call to action – Wait
On the 4-hour chart, the $0.0000055 (red) supply zone has been a challenge for Shiba Inu crypto bulls throughout September. A breakout past this supply zone is necessary to shift the short-term bias to bullish.
Though the MFI was close to overbought conditions, the CMF stubbornly remained beneath +0.05. It suggested steady buying pressure was not behind SHIB despite the gains over the past couple of days.
Even if the $0.0000055-area is overcome, the higher timeframe Fibonacci retracement level at $0.00000613 could still stand strong. Therefore, traders can wait for a bullish trend shift on the daily timeframe, or look to sell a SHIB rally into key supply zones.
Final Summary
- Memecoin market has been able to outperform Bitcoin and Ethereum over the past week.
- Shiba Inu has made strong gains recently, but is yet to clear the pivotal short-term resistance zone at $0.0000055.
