Shiba Inu appears to be forming a bullish pattern after weeks of downward movement. The meme coin has shown technical signals suggesting a possible trend reversal may be underway.
Recent price action shows SHIB holding above critical support levels while other major cryptocurrencies struggled. The token has formed a rejection candle on the daily chart with a long lower wick. This formation indicates buyers stepped in aggressively near local lows. At the time of writing, Shiba Inu trades at around $0.0000000001179.
The pattern typically emerges when selling pressure begins to fade. Demand starts absorbing available supply at lower price points. Traders view this structure as a potential signal that bears are losing momentum.
Technical Formation Points to Shift in Market Dynamics
The cryptocurrency broke down from a narrowing wedge pattern in recent sessions. However, buying interest quickly overwhelmed the initial selling pressure. This type of false breakdown often traps late sellers who entered positions expecting further declines.
When false breakdowns occur, they can trigger sharp reversals. Short sellers rush to close positions while value buyers enter at perceived discount levels. The combination creates upward pressure that can fuel rallies.
SHIB’s price structure remained relatively intact during Bitcoin’s recent breakdown below major support zones. While Bitcoin plunged through historically significant levels, Shiba Inu did not experience a proportional collapse. The token maintained its broader range instead of cascading lower.
This divergence suggests SHIB may have exhausted its downside potential. Assets that demonstrate relative strength during market-wide selling often lead recovery phases. The performance indicates accumulation may be occurring even as broader sentiment remains negative.
Key Resistance Levels Now in Focus
Short-term moving averages currently cap upward attempts. These technical barriers need to be cleared before a sustained recovery can develop.
A successful breach above these moving averages could open the door for significant gains. Analysts estimate a potential 20-30% recovery if market conditions stabilize. The path higher depends on whether buyers can maintain pressure at current levels.
Volume patterns will play a crucial role in determining the strength of any reversal. Higher buying volume on upward moves would confirm genuine demand rather than short covering. Conversely, weak volume on rallies might indicate the reversal lacks conviction.
The broader cryptocurrency market remains fragile following Bitcoin’s sharp decline. Any recovery attempt by SHIB will likely face resistance from prevailing negative sentiment. However, assets that show early reversal signals often outperform when market conditions improve.
Source: https://coinpaper.com/14362/shiba-inu-price-shows-bullish-reversal-signs-after-weeks-of-decline
