Sharing a 98% correlation with Bitcoin, can Shiba Inu sustain key support levels
The dog-themed token fell after hitting the 23.6% Fibonacci resistance. Shiba Inu (SHIB) sellers denied any substantial bullish rally by keeping the price below the constraints of its EMA ribbons. Meanwhile, the bears triggered a breakout of the long-term symmetric triangle. (To shorten it, SHIB prices are multiplied by 1000 From here).
If the sellers continue to capitalize on the current sentiment and continue to dampen the buying rallies, SHIB could look to retest the $0.01082 support. At press time, the alt was trading at $0.01223.
SHIB daily chart
Source: TradingView, SHIB/USD
Shortly after SHIB broke out of the long-term declining channel, the $0.033 resistance shrugged off its bullish rally in early February. Meanwhile, the bulls have supported the lows by marking trendline resistance (previous support) over the past four months.
After facing a compelling hurdle at the 23.6% Fibonacci level, the bears were quick to rally below the $0.02 level. SHIB lost over 68% of its value following the 23.6% reversal and fell to its lowest level in seven months on May 12. With the widening gap between the EMA ribbons, the sellers asserted their increasing strength.
With the lower band of the Bollinger Bands (BB) approaching support at $0.01082, price action broke out from the recent lower wedge. Thus, a pullback towards the $0.011 area could propel a short-term bullish rally towards the $0.013 mark in the coming days.
Reasoning
Source: TradingView, SHIB/USD
After failing to hold above the 38-40 range, the RSI saw a substantial pullback into the oversold region. As the bulls struggled to topple the resistance at 33, the current rally phase looked weak.
Nevertheless, a potential bullish crossover of the Aroon up (yellow) and Aroon down (blue) indicators would raise a possibility of a bullish comeback. Moreover, the FMC was at a critical stage. A close below -0.1 would confirm a bearish divergence with price and delay a potential rally on the SHIB chart.
Conclusion
While the technical indicators were mixed, the current market structure amplified the bearish narrative. A continued retracement could find resting ground in the $0.01 area before the bulls have a chance to negate the selling pressure. A potential rally past the $0.013 level would open doors for buyers to test the resistance of its EMA ribbons.
Finally, alt shares a whopping 98% 30-day correlation with Bitcoin. Therefore, keeping an eye on Bitcoin’s movement along with the general market sentiment could be key to making a profitable move.