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Following several weeks of sideways trading and support tests, Shiba Inu is beginning to show signs of strength. A descending trendline spanning several months that has held the price steady since mid-summer is prominent on the daily chart. The prospect of ultimately ending the downtrend is once again present, as SHIB is now regaining momentum and moving closer to this resistance.
SHIB consolidation
SHIB has successfully regained its 50 EMA on the daily chart, which has historically served as a pivotal point for momentum changes and is currently trading close to $0.0000126. The successful retest of the triangle support zone at $0.0000120 sealed SHIB’s return to its consolidation structure. This action strengthens the argument that consumers are taking back control.
Breaking a multi-month downtrend is not an easy task, though. Converging close to $0.0000135-$0.0000140, the descending resistance trendline looms overhead. Should this level be rejected, the bearish structure would be strengthened, and SHIB might return to its established support, which is located between $0.0000120 and $0.0000115.
Is Shiba Inu ready?
An intriguing layer has been added to the outlook by on-chain activity. The steadily declining exchange reserves for SHIB indicate that there is less immediate sell pressure because fewer tokens are sitting on exchanges. This suggests that some investors might be positioning themselves in advance of a possible breakout, especially when combined with slight increases in transaction activity.
However, traders need to exercise caution. The 50 EMA is acting as a recalcitrant barrier, despite the triangle’s recovery signifying resilience. The rally could lose steam before it reaches the downtrend resistance, unless SHIB can break through it with volume.
Technical and on-chain conditions suggest a possible breakout, and Shiba Inu is about to test a multi-month downtrend line. However, there is a good chance that the resistance will hold firm once more. The token will either eventually break free from its consolidation cycle or become stuck in yet another rejection, depending on whether SHIB is able to flip this level.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team