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Shiba Inu may struggle to recover in the short term after failing to hold above a dynamic support level that has cushioned weak prices for over a month.
Shiba Inu ($SHIB) dropped 3.3% on Sunday to completely give back all its earlier gains last week. The drop saw the meme coin post its first weekly red candle in three weeks, signaling that momentum has shifted. But there is more to this that Shiba Inu holders should be wary of.
Key Points
- On the daily timeframe, Shiba Inu broke below an ascending trendline support amid the recent downtrend, bringing fresh pressure on its price.
- This dynamic demand zone has cushioned prices since March 8, when $SHIB reached an intraday low of $0.00000523.
- Additionally, $SHIB had a bearish engulfing candle on the weekly chart.
- All indications point lower, with $0.00000520 as the next stronghold.
- Despite the downturn, $SHIB remains within parallel channel that started forming in March, which could be the last line of support.
Shiba Inu Loses Support
On the daily timeframe, Shiba Inu broke below an ascending trendline support, bringing fresh pressure on its price. This dynamic demand zone has cushioned prices since March 8, when $SHIB reached an intraday low of $0.00000523.
This marked its lowest price since the February 6 crash to $0.0000050, but whales stepped in and defended this support area. Ever since, the token has developed atop this ascending trendline support until yesterday.
Following the over 3% dip, $SHIB broke below this trendline to close at $0.00000577. The breach was not a fake-out or a small wick below the support; it was a decisive breakdown with a long-bodied candlestick, signaling clear directional conviction.
Bearish Implications for $SHIB
Breaking below this support level leaves $SHIB vulnerable. The token has made a series of higher lows above this trendline, keeping hopes of a rebound alive. However, with the convincing breakdown, the meme coin could experience a significant decline.
Additionally, $SHIB had a bearish engulfing on the weekly chart. Its 3.8% decline last week engulfed the prior week’s green candle, signaling that bears have regained control of the market.
With no bullish divergence or any positive indications, it does not look good for Shiba Inu. Trading volume is also dwindling, signaling that market participants have adopted a cautious stance as the asset dipped. Taken together, all indications point lower, with the $0.00000520 support being the next stronghold. Breaking this takes $SHIB back to the February 6 lows.
Shiba Inu Range Still Holds—Last Line of Defense?
Meanwhile, despite the downturn, $SHIB remains within parallel channel that started forming on March 11. This channel has served as both support and resistance for the token as it shuffles between the upper and lower price ranges.
The downtrend brought $SHIB to the lower support band of this range, but not below it. This could be the last line of defense for Shiba Inu, and breaching it could further confirm a bearish shift.