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Given that price action is still dominated by persistent selling pressure, Shiba Inu is currently showing a reversal after a slight recovery, which is the last thing you want to see on assets that enter a gradual recovery. In a bearish continuation pattern that traders typically view as one of the worst cases for a short-term recovery, SHIB has now broken down from a tightening consolidation structure and slipped toward new local lows following several unsuccessful recovery attempts.
Shiba Inu might explode
SHIB had been compressing inside a tiny rising support structure on the daily chart, but it had been unable to recover descending resistance levels on several occasions. Because of this, a wedge-like formation was formed, which frequently resolves to the downside when the overall trend is already bearish. Selling quickly increased after support gave way, forcing the token below significant short-term moving averages and negating recent stabilization efforts.
This weakness is reinforced by momentum indicators. While sellers may be exhausted in the short term, bullish strength has not yet made a convincing comeback, as indicated by RSI readings that are still close to oversold territory. Moreover, market participants were willing to aggressively exit positions rather than accumulate at what were thought to be bargain prices, as evidenced by volume spikes during the breakdown.
Nevertheless, there are still recovery scenarios in spite of the bleak structure. The formation of a double-bottom structure by SHIB in the upcoming sessions is now the key to the most realistic bullish setup. A second test and a higher bounce could create a technical floor if the price settles around the current lows, and buyers intervene to protect the zone.
Shiba Inu must test it out
A formation like that would suggest that selling pressure has subsided and that demand is at last increasing, which might enable SHIB to retest previously broken resistance zones above. Since the asset is now so heavily oversold, a successful double bottom could result in a significant corrective rally.
Traders should continue to exercise caution. SHIB might find it difficult to maintain even its current levels if the larger cryptocurrency market keeps losing ground, which would allow for another leg lower before a long-term recovery is possible. At the moment, SHIB is at a crucial juncture: either buyers are able to create a bottom here, or the bearish trend will continue unchecked.
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