Shiba Inu: All you need to know about the next buying opportunity


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

The meme token has been on a steep downturn since hitting its ATH in October last year. In fact, Shiba Inu (SHIB) declined between southbound parallel channels and fell below the vital liquidity range near the $0.033-zone. (SHIB prices are multiplied by a factor of 1000 from here on).

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In light of the past tendencies of the buyers to defend the $0.02195-$0.02013 range, SHIB bulls aimed for a retest of the 20 EMA (red) before reversing back into a long-term downtrend.

At press time, SHIB was trading at $0.022. 

SHIB Daily Chart

Source: TradingView, SHIB/USD

During this bearish phase, SHIB lost its crucial Point of Control (red, POC) near the $0.033-level and also fell below its 200 EMA (yellow). To top it up, this level coincided with the 23.6% Fibonacci resistance. The bulls took charge of the $0.02-mark that they upheld for over four months.

Consequently, the price entered a tight phase while the bulls started building up pressure and rejecting the lower prices. Thus, it saw over 70% gains from 3 to 9 February and broke out of the down-channel while the 23.6% level stood strong. Over the last month, SHIB formed a falling wedge (reversal pattern) on its daily chart. But, as the 20 EMA fell, it plunged below the 200 EMA (yellow). In doing so, the bears visibly had an edge.

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Going forward, if history does repeat itself, the bulls would be keen on maintaining the $0.02-$0.021 range intact. Thus, keeping up the recovery hopes alive towards the $0.024-level. Also, traders must closely watch the decreasing gap between the 50 EMA (cyan) and the 200 EMA. If they undertake a bearish crossover (death cross), a major sell-off might be lurking around the corner.

Rationale

Source: TradingView, SHIB/USD

The bearish RSI strived to find a close above the 43-45 resistance range. Interestingly, while the price action kept marking lower troughs over the past three weeks, the RSI kept the 39-support intact. This revealed a bullish divergence. Also, the OBV maintained its immediate support while price diverged in the south.

Furthermore, the DMI lines flashed a bearish preference but flashed increasing buying influence. Furthermore, the ADX still pictured a weak directional trend for SHIB.

Conclusion

All in all, a reading of its technical indicators suggested that a near-term revival might take place towards its 20/50 EMA. Following this, the alt could continue to reverse into its long-term downtrend. 

Besides, the alt shares a 69% 30-day correlation with Bitcoin. Hence, keeping an eye on Bitcoin’s movement with the overall market sentiment would be essential for making a profitable move.


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