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Analysis

Sharing a 98% correlation with Bitcoin, can Shiba Inu hold its key support levels

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Source: Canva


The dog-themed token has been tumbling after striking the 23.6% Fibonacci resistance. Shiba Inu (SHIB) sellers have denied any substantial bull rallies by keeping the price below the constraints of its EMA ribbons. Meanwhile, the bears triggered a breakdown of the long-term symmetrical triangle. (For brevity, SHIB prices are multiplied by 1000 from here on).

Should the sellers continue to capitalize on the current sentiment and continue curbing the buying rallies, SHIB could eye for a retest of the $0.01082-support. At press time, the alt traded at $0.01223.

SHIB Daily Chart

Source: TradingView, SHIB/USD

Soon after SHIB broke out of the long-term down-channel, the $0.033-resistance disregarded its bullish rally in early February. Meanwhile, the bulls took charge of the troughs by marking trendline resistance (previous support) over the last four months.

After facing a convincingly stiff hurdle at the 23.6% Fibonacci level, the bears were quick to pull off a rally below the $0.02-level. SHIB lost over 68% of its value from the 23.6% reversal and fell toward its seven-month low on 12 May. With the rising gap between EMA ribbons, the sellers affirmed their increasing vigor.

With the lower band of the Bollinger Bands (BB) approaching the $0.01082 support, the price action broke out of the recent falling wedge. So, a pullback toward the $0.011-zone could propel a short-term bull rally toward the $0.013-mark in the coming days.

Rationale

Source: TradingView, SHIB/USD

After failing to sustain itself above the 38-40 range, the RSI saw a substantial pullback into the oversold region. With the bulls struggling to overturn the 33-resistance, the current revival phase seemed weak.

Nevertheless, a potential bullish crossover of the Aroon up (yellow) and the Aroon down (blue) indicators would reignite a bullish comeback possibility. Also, the CMF was at a critical stage. A close below the -0.1-mark would affirm a bearish divergence with price and delay a potential recovery on SHIB’s chart.

Conclusion

While the technical indicators were a mixed bag, the current market structure amplified the bearish narrative. A continued retracement could find resting grounds in the $0.01-zone before the bulls get a chance to negate the selling pressure. A potential recovery beyond the $0.013-level would open doorways for the buyers to test the resistance of its EMA ribbons. 

Finally, the alt shares a whopping 98% 30-day correlation with Bitcoin. Hence, keeping an eye on Bitcoin’s movement with the overall market sentiment could be essential for making a profitable move.

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With a background in financial analysis and reporting, Yash is a full-time journalist at AMBCrypto. He has a keen interest in blockchain technology, with a primary focus on technical analysis of cryptocurrencies.

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.