The price of Shiba Inu (SHIB) has finally reached the support line of the long-term pattern. The price is in the process of launching a rebound, but its credibility has yet to be confirmed.
If SHIB makes a bearish breakout from the triangle, the support structure that has existed for a year will become invalid.
Meanwhile, a bounce in the price could lead to a significant upside and perhaps price will reach the triangle resistance line.
In the meantime, a bounce in the price could lead to a significant upside and perhaps price will reach the triangle resistance line.
Shiba Inu finally bounced off long-term support
The popular meme coin SHIB, created by the Shiba Inu project, is an ERC-20 format token and one of the main rivals of Dogecoin.
As the results of technical analysis of the daily chart show, the Shiba Inu coin has been trading inside a symmetrical triangle since June 2022.
This pattern is considered neutral, so the price has an equal chance of breaking both up and down out of it.
May 8 SHIB rebounded from the triangle support line. Before that the price has not touched this line since the beginning of the year. The bounce was followed by a sharp rebound (green icon).
Although the rebound did not happen immediately, the price of SHIB is in the process of forming a bullish candle, which could be a catalyst for growth towards the resistance line of the triangle.
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The daily Relative Strength Index (RSI) gives mostly bullish signals.
It is a momentum indicator indicating overbought/oversold and bullish/bearish market sentiment, depending on whether it is above or below the 50 mark.
In SHIB’s case, it is below 50 but it is rising and out of oversold territory. In addition, it is signaling a bullish divergence (green line).
It is possible to speak about bullish divergence, when the decrease in price is not accompanied by a decrease in momentum. This often precedes its substantial rise.
Whether SHIB’s rebound is convincing
Technical analysis of the shorter-term six-hour timeframe supports the validity of the rebound. First, the price movement has been contained within a descending parallel channel since April 16.
This pattern is considered a corrective pattern, so its southerly direction implies that the broader trend in the currency is bullish and the price will eventually break north out of this channel.
The bounce described earlier triggered a bullish breakout from this channel, and the move was confirmed by the close on the six-hour chart.
This indicates that the decline which began on April 16 is now complete. As on the daily chart, the bounce was preceded by a bullish RSI divergence (green line).
As a result, the most probable scenario is the growth of SHIB at least to the resistance at $0.000010 and possibly to the triangle resistance line at $0.000012.
But a break-down of the price below the support line of the triangle will negate this bullish forecast for SHIB.
In that case a further decline might take the price to the level of $0.0000057, which the market has not visited since June 2021.