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Once again, Shiba Inu has found itself in a precarious position following what seemed to be a bullish breakout. The token experienced a brief surge in value in early September, testing the critical resistance zone around $0.000015. However, momentum soon stalled, resulting in a dramatic reversal. Because of the rejection, traders are now more worried that SHIB might drop back to its summer lows or, worse, lose another decimal place if bearish pressure picks up speed.
With the help of rising trading volume, SHIB was able to break out after weeks of consolidation in a tightening wedge pattern. Nevertheless, the rally did not last long. Because of strong selling pressure and the general lack of conviction on the market, the price was unable to hold above the $0.000015 mark.
A common indicator for identifying the long-term trend, the 200-day EMA (black line on the chart), was forced back below SHIB by the rejection. SHIB could move closer to the $0.000012 support; now that the daily close is back below this level, a decline would allow for a move to $0.000010.
Given the macro context, this reversal is especially worrisome. Bitcoin has tested $115,000 and is still stuck in a narrow range with little follow-through. Due to their reliance on speculative inflows, altcoins such as SHIB are not able to keep up with the market. Investor enthusiasm certainly is not boosted by a decreased activity on Shibarium, SHIB’s layer-2 scaling solution, according to on-chain data. In addition, the unsuccessful breakout has produced a traditional bull trap, exposing late buyers and possibly increasing selling pressure.
The way SHIB interacts with the 200 EMA is the most detrimental signal. SHIB’s retake of this important trend indicator was momentarily celebrated by bulls, but the swift reversal below it invalidates that move and indicates weakness. In the past, unsuccessful retests of the 200 EMA have resulted in protracted downward trends; therefore, the likelihood of a more profound correction increases significantly unless SHIB can promptly recover above $0.000014.
