‘Much ow’ ahead? Dogecoin chart fractal puts Shiba Inu’s 390% QTD rally in danger
Shiba Inu (SHIB) has emerged as one of the best investments heading into the fourth and final quarter of 2021, with its price rising by over 390% in the first week of October. Nonetheless, the spin-off meme cryptocurrency now risks wiping most of those gains in the coming sessions.
Yuriy Bishko, a Ukraine-based market analyst, discussed the potential bearish scenario based on Shiba Inu’s recent price trends that appear eerily similar to those recorded in the Dogecoin (DOGE) market earlier this year.
For instance, SHIB’s October price rally followed five months of consolidation inside a $0.00000398-wide price range. Similarly, DOGE’s sideways trend in Feb-April 2021, wherein its bids bounced between $0.0471 and $0.0630, served as a basis for a 500%-plus price rally in late April.
Bishko said that traders who bought Shiba Inu tokens during its sideways consolidation phase should sell at least 20-30% of their positions if they are still holding after the rally. Meanwhile, if SHIB’s net breakout stretch exceeds 500%, then traders should dump another 70-80% of their net holdings.
That is mainly because Dogecoin’s supersonic price rally in late April resulted in a circa 60% correction. Bishko added:
“If SHIB repeats the same pattern, [traders] can buy more coins at a 60% discount.”
SHIB resumes uptrend
The profit-taking strategy appeared as Shiba Inu resumed its uptrend Friday after falling 41% in a price correction in the previous session.
SHIB rallied almost 27.5% to hit an intraday high of $0.00002919, much in line with similar upside moves across all the top crypto assets, including Bitcoin (BTC) and Ether (ETH). Small-cap tokens typically tail trends in the top-cap markets; for instance, SHIB’s 390% quarter-to-date (QTD) price rally coincided with Bitcoin’s 30% upside move in the same period.
At the same time, Shiba Inu’s daily relative strength index (RSI) identified the cryptocurrency’s current price valuations as overbought. Analysts consider an RSI reading above 70 as excessively valued for an asset, typically following up with either a price correction or sideways consolidation.
Bleeding Crypto, a Twitter-based independent market analyst, anticipated SHIB to retest its sessional high of $0.00003528. The pseudonymous analyst cited a Fibonacci retracement graph behind its bullish continuation setup, noting that SHIB’s ability to rebound strongly after falling almost 50% meant that “it’s going back to business.”
$SHIB Looks like the 50% FIB is enough for $SHIB and its going back to business. Pretty impressed. I missed this whole train but I still like to admire the TA. Good Luck guys! pic.twitter.com/Ql9NI3rL0t
— Bleeding Crypto (@Bleeding_Crypto) October 8, 2021
Shiba Inu’s fundamentals seem to agree.
As Cointelegraph covered earlier, the team behind the cryptocurrency has been attempting to become a contender in the DeFi space. In detail, it launched ShibaSwap, a decentralized cryptocurrency exchange platform, in early July 2021, which now has over $360 million locked inside its liquidity pool.
Related: Is Dogecoin set to follow Shiba Inu’s (SHIB) 400% breakout?
Moreover, the Shiba Inu speculators have also been showing interest in the next week’s launch of 10,000 nonfungible tokens (NFTs), dubbed “Shiboshi.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Credit: Source link