Disclaimer: The results of the following analysis are the sole opinion of the author and should not be taken as investment advice.
Post its decline below the daily 20 EMA (red), Shiba Inu [SHIB] dived to test its five-month trendline resistance (yellow, dashed). After a dip below this level, the bears have been increasing their influence over the past few days.
The current setup continued to take a bearish bias, especially after the recent bearish engulfing candlesticks. Any close above or below the trendline resistance could affect the upcoming trend of the dog-themed token. (For brevity, SHIB prices are multiplied by 1,000 from here).
At press time, SHIB was trading at $0.00807, up 6.07% over the past 24 hours.
SHIB daily chart
Source: TradingView, SHIB/USD
SHIB’s symmetrical triangle-like structure saw an expected collapse due to the token’s previous downtrend. The drop below $0.02 marked a fall of over 63% towards its eight-month low on June 13.
Over the last month, the alt saw a descending triangle on the daily time frame. The recent collapse again confirmed the declining strength. As a result, the gap between the south-facing 20 EMA and the 50 EMA (cyan) has hit a record high.
With relatively lower trading volumes, SHIB was still standing vulnerable near the $0.008 zone. Given the current sentiment, a reversal of the immediate trendline resistance could add to the downside. In this case, the potential targets were in the $0.0068 area.
Should there be a sudden increase in buying volume, any break above the trendline resistance through the 20 EMA could be short-lived.
Reason
Source: TradingView, SHIB/USD
After testing the 38 level several times, the RSI plunged well into oversold territory. From here, a revival was plausible but would likely be short-term.
While the MACD lines performed a bearish crossover below the zero level, the indicator pointed to a selling edge.
Furthermore, the Squeeze Momentum indicator continued to take its position below its equilibrium while blinking gray dots. Thus, a break is represented with high volatility.
Conclusion
The broader signs point to a bearish direction. Unless a valid reason is otherwise determined by investors/traders, trading against the trend may not be favorable.
A convincing close below the $0.00776 level can open doors for short selling. The stop loss could be set in the range of $0.00862 to $0.00892 to manage the risk effectively.
Additionally, the alt shares a staggering 79% 30-day correlation with Bitcoin. Therefore, keeping track of Bitcoin’s movement with overall market sentiment could be essential for a profitable move.
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