The price of the Shiba Inu (SHIB) has shown a notable increase, rising 6.5% over the past 24 hours and 12.5% over the past week, marking a significant shift towards bullish momentum. Technical analysis of the SHIB/USD daily chart reveals a descending trend line where the price has been rejected at every daily close over the past two months.
However, today's price action has led to a turnaround. The downtrend line that previously governed the Shiba Inu's downward trajectory has recently been breached, indicating a potential reversal or at least weakening downward pressure. Famous cryptocurrency analyst Cold Blood Schiller Notice“One of the commandments of memes is to always lengthen the meme when a trend line breaks.”
Among the commandments of memes
You should always lengthen the meme when the trend line breaks pic.twitter.com/iPDpuX46ZH
– Cold-Blood Schiller (@ColdBloodShill) May 4, 2024
Before the breakout, he noted, “In 20IQ szn, you are looking for 20IQ entry signals. Breaking the trend line that has been respected on every daily close over the past two months would be one of those moves. SHIB is starting to move.”
This shift is supported by the positioning of Exponential Moving Averages (EMAs); The 20-day moving average was breached at approximately $0.00002238 and the 50-day moving average was at $0.00002131 and were both breached with the daily close yesterday.
Moreover, the 100-day and 200-day moving averages at around $0.00001831 act as important support areas, indicating strong buying levels in case of any major bounce. The price reaction to these moving averages in the coming days will be crucial in determining the sustainability of the current breakout.
Applying a Fibonacci retracement from the recent peak to the trough also shows a pivotal development of the Shiba Inu price movement. The 0.236 Fibonacci retracement level at $0.00002483, which was recently crossed in yesterday's trading session, now acts as crucial short-term support.
The importance of this level is enhanced by its role in confirming the legitimacy of the recent breakout from the downtrend line – a breakout that may be dismissed as a mere technical anomaly or a “fake breakout.”
Currently, the $0.00002483 level is being retested as support. A close of today's daily candle above this mark would strengthen the case for a more sustainable upward trajectory in SHIB price. Such a closure would boost investor confidence that the breakout is real and that market sentiment may shift more strongly to the upside.
If SHIB price holds above this newfound support, the next immediate target will be the $0.00002882 level, which is related to the 0.382 Fibonacci retracement level. A break of this resistance is likely to pave the way for further gains towards $0.00003205 and $0.00003527, i.e. the 0.5 and $0.618 Fibonacci retracement levels, respectively.
Reaching the 0.618 level, often referred to as the “golden ratio,” would potentially result in significant gains of 40% from current prices, providing a lucrative scenario for investors closely monitoring these technical signals.
The increased trading volume (+30% in the last 24 hours) confirms active market participation, which is crucial to supporting the legitimacy of the breakout. Besides, the Relative Strength Index (RSI) at 55.05 indicates that the asset is neither overbought nor oversold, and is leaning towards a neutral to slightly bullish stance. This provides room for upward movement without immediate fears of entering overbought territory.
Overall, with the recent break above the downtrend line, the Shiba Inu price action calls for a bullish outlook, indicating that the downtrend may be losing its grip. The key for traders will be to monitor the daily close above $0.00002483. Confirmed stability above this level may pave the way for further rise towards higher Fibonacci levels.