Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
The dog-themed token has been on a slump since its ATH last year. Shiba Inu (SHIB) sellers have refused to offer any leeway to the bulls. All the buying rallies over the past four months were constricted within the bounds of its symmetrical triangle setup. (For brevity, SHIB prices are multiplied by 1000 from here on).
Now, the price approached its immediate trendline support while traversing in a down-channel. So, a likely recovery from its baseline would head right into the rectangle, as highlighted on the chart.
At press time, SHIB was trading at $0.02349.
SHIB Daily Chart
Source: TradingView, SHIB/USD
Soon after SHIB broke out of the long-term down-channel (white), the 23.6% Fibonacci resistance flouted its bullish rally in early February. Meanwhile, the bulls took charge of the troughs by marking trendline support over the last three months (white, dashed).
SHIB’s retracement towards the $0.02-level shaped a symmetrical triangle pattern. Its current trajectory led to a baseline from where a likely spike seemed to be building up in the market. With the 20 EMA (red) lowering below the 50 EMA (cyan) and 200 EMA (green), the sellers exhibited their rising vigor while refraining the bulls to redefine the current market structure.
The traders/investors should wait for a break above the current down-channel (yellow) to enter positions. A close above this pattern could lead to an extended squeeze phase in the $0.023-$0.025 range. Then, the high volatility phase could favor the sellers while they still substantially control the wider trend.
Rationale
Source: TradingView, SHIB/USD
The RSI found a reliable cushion in the 38-40 range. So a likely revival from here would support a near-term bull rally towards the rectangle (blue).
Furthermore, the CMF was well below the zero-line and reaffirmed a selling advantage. In light of the higher troughs over the last three days, CMF beheld the potential of a bullish divergence with price. Mimicking this, the OBV followed to affirm a bullish divergence with price.
Conclusion
The technical indicators were hopeful of a possible break into the $0.023-$0.025 range. Post this, should the sellers continue to observe their historical edge, SHIB would need to brace for a possible drawdown on the longer timeframe.
Last but not least, the alt shares a nearly 66% 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.
