Shiba Inu SHIB / USD was trading about 5% lower at press time, marking some recovery from the 27% drop the crypto had suffered at the start of the 24-hour trading period.
The cryptocurrency sector took a turn for the worse on Wednesday night Bitcoin BTC/USD, ether ETH/USD and retail favorite Dogecoins DOGE/USD Plunging 12%, 18%, and 23%, respectively, taking the three cryptos to 52-week lows.
Shiba Inu narrowly avoided printing a new all-time low before bouncing back higher and may avoid that fate for the immediate future as the crypto looks set for a bigger bounce in the coming days.
The crypto’s Relative Strength Index (RSI) is reading around 24%, putting the stock in severely oversold territory.
The RSI is an indicator that technical traders use to measure bullish and bearish price momentum. RSI values can range from 0 to 100, with values between 30 and 70 generally being considered healthy.
When a stock’s RSI falls below 30%, it is considered oversold. When a stock enters oversold territory, it indicates that the security’s price is no longer reflecting the true value of the asset, which can signal that an upward trend reversal is on the horizon.
When a stock’s RSI rises above the 70% range, it is considered overbought. When a stock enters overbought territory, it signals that the security’s price has risen to its intrinsic value, which can signal that a downside reversal is looming.
The RSI is best used in combination with other signals and patterns on a stock chart, as stocks can remain in oversold and overbought territory for an extended period of time before reversing.
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The Shiba Inu Chart: Shiba Inu is trading in a downtrend with the recent bottom high printed at $0.00002216 on May 1st and the last confirmed bottom low formed at $0.00001840 on April 30th. Thursday’s intraday low could become the next intraday low the pattern, but Friday’s candle needs to be printed for confirmation.
- Higher prices are likely to come in the next few days not only because the Shiba Inu RSI is floating in the oversold territory, but also because the cryptocurrency has developed a bullish divergence on the daily chart. Bullish divergence occurs when a stock’s RSI makes higher lows and the crypto’s price makes lower lows. Eventually, the divergence will correct itself, which will most likely occur with an increase in the price of Shiba Inu.
- If Shiba Inu closes the trading day above the $0.00001050 level, the crypto will print a long lower wick which could indicate higher prices to come on Friday. If the crypto closes the trading day below this level, lower prices are likely on the horizon. The next most likely scenario is that Shiba Inu will print an inside bar pattern on the daily chart to consolidate the sharp decline.
- Shiba Inu has resistance at the top at $0.00001349 and $0.00001734 and support at the bottom at $0.00000856 and $0.00000690.
See Also: Why Dogecoin Spinoff Shiba Inu Is Plunging Today
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