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Shiba Inu on Verge of Pattern Break After 71 Days – Which Path Will SHIB Price Take?

Last Updated May 13, 2024 1:42 PM
Valdrin Tahiri
Last Updated May 13, 2024 1:42 PM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • Shiba Inu has traded inside a descending triangle since its yearly high on March 5.
  • The end of the pattern is next week, so a decisive movement outside of it is likely.
  • SHIB is trailing other Ethereum memecoins such as PEPE and FLOKI.

The SHIB price is trading inside a compressing range for more than two months. While there have been movements outside of this range, they were not sustained and led to the creation of long wicks in both directions.

There are conflicting readings in the short- and long-term. With the SHIB price nearing the end of its bearish pattern existing since March 5, the prevailing question is if the short-term outlook can invalidate the bearish long-term pattern, or if a breakdown is inevitable.

Can SHIB Invalidate Bearish Pattern?

The descending triangle in which SHIB trades is a bearish pattern. So, in general, a breakdown from it is the most likely scenario. However, there are signs pointing to the contrary.

Firstly, SHIB  has created what resembles a triple bottom pattern inside the $0.000022 support area. Besides being a bullish pattern, the triple bottom is combined with long lower wicks (green icons).

Secondly, bullish divergences in both the RSI and MACD (green) accompanied the most recent bounces. These divergences usually lead to upward movements.

Shiba Inu Resistance Trend Line
SHIB/USDT Daily Chart | Credit: TradingView

So, despite the presence of a bearish descending triangle, a breakout is the most probable resolution because of the divergences and short-term bullish pattern. If one happens, the next resistance will be at $0.000032, 35% above the current price. On the other hand, a breakdown can trigger a 46% drop to the closest support at $0.000012.

Other Ethereum memecoins such as PEPE and FLOKI have already broken out from their resistances and are nearing their yearly highs.

Wave Count Contradicts Price Movement

Unlike the SHIB price action and indicator readings, the wave count is bearish. The defining characteristic is the symmetrical triangle in place since April 13. Elliott Wave rules state that triangle cannot be part of wave two. So, the triangle is likely wave B in an A-B-C correction (white).

SHIB Price Wave Count
SHIB/USDT Six-Hour Chart | Credit: TradingView

So, the wave count directly contradicts the price action, suggesting a breakdown from the short- and long-term triangle is likely. This can lead to a drop to the previously outlined support at $0.000012, completing wave C in the process.

SHIB Price Trend Unclear

Because of conflicting readings from the price action, indicators and wave count, the SHIB trend is unclear. Whether the price breaks out or down from its triangle will be key in determining the future trend’s direction. Since the resistance and support trend lines of the pattern will converge next week, a consequential movement can take place.

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