Shiba Inu on its way back to support, demand could see another leg upward

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice

The recent bullish momentum behind Bitcoin has been magnified for Shiba Inu, which has picked itself up from a support level and gained around 60% within a week, before facing selling pressure. At press time, Shiba Inu had a $17.2 billion market cap, which was just $3 billion lower than Dogecoin, making these two the most popular meme cryptocurrencies. It appeared likely that SHIB’s market structure had been flipped to bullish, however this could take a few weeks to confirm.

Source: SHIB/USDT on TradingView

SHIB found support at the $0.02045 (SHIB prices are multiplied by a factor of 1000 to reduce decimal places and improve clarity) level and has bounced strongly since then. The $0.024 area has been a place where SHIB had found demand in mid-October and moved upward from.

This area offered some resistance in the past two weeks, but sellers were exhausted and bulls soared past this area, reaching as high as the $0.033 level of resistance. This level was slightly higher than the previous lower high in SHIB’s downtrend, which showed that bulls had sufficient strength to push prices that far north. Whether they can follow through is a question that remains to be answered.

For more aggressive buys, the $0.027 and $0.025 levels are places where the price was likely to react positively. The $0.024 area and the 55-SMA (green) might also see demand step in for SHIB.

Rationale

Source: SHIB/USDT on TradingView

The RSI on the 12-hour timeframe has skyrocketed in the past two weeks and reached into the overbought area, something that hadn’t been done since October last year. This showed strong momentum had been seen, and further upside could be witnessed in the weeks to come. The price was above the 55 SMA (green) and the 21 SMA (orange), although the moving averages themselves had not yet formed a bullish crossover.

The Awesome Oscillator poked above the highs it registered in late December, which showed bullish strength was considerable. The AO also highlighted how the trend in recent months has been strongly bearish.

The OBV also poked above the late December highs- significant demand was behind SHIB’s recent rally.

Conclusion

Strong demand and bullish momentum have propelled SHIB to gain more than 60% in the past week before the test of $0.033 as resistance. The pullback lower for SHIB can react positively at the $0.029, $0.027, or $0.024 levels. Flipping the $0.033 level to support could encourage conservative investors that the market bias was once more bullish.