Shiba Inu's (SHIB) Catastrophic Crash Might Be Over: Possible Scenarios

Shiba Inu recently recovered from one of its few remaining technical anchors, an incredibly oversold RSI. For the time being, the slide was stopped solely by the indicators scraping levels that typically only show up during capitulation phases, according to the TradingView chart. 

Becoming oversold

One of two patterns typically occurs when an asset falls into deep oversold territory while the price prints new multimonth lows: either exhaustion selling that precedes a rebound, or the initial phase of a protracted downtrend that grinds lower until liquidity dries up.

Due to sellers’ eventual lack of momentum, SHIB currently appears closer to the first scenario. Every major moving average, including the 50, 100 and 200, is stacked above the price, indicating a persistent macro downtrend. The fact that volume remained comparatively steady throughout the decline lends credence to the theory that this was a controlled, but gradual, unwind rather than panic-selling.

We are currently witnessing a technical, rather than sentiment-driven, rebound. The RSI signal and the temporary exhaustion of downward pressure are what buyers are responding to.

Possible scenarios

Two or three of the following scenarios are important.

First, rally toward the 50-day moving average in the short term. If the oversold bounce continues for a few more sessions, the price may move closer to the $0.0000095-$0.000010 range. That is where the 50-day and 20-day MAs meet. The bounce was merely a respite if SHIB is rejected there. Anticipate another test of the lows.

Second is sideways stabilization prior to an appropriate reversal of the trend. Consolidation becomes beneficial if volatility decreases and SHIB remains above $0.0000080. Here, a flat base would indicate that sellers have finished and accumulation has begun in silence. For a medium-term recovery, that is the healthiest configuration, but it will require time.

Third comes a breakdown if the bounce does not work right away. The RSI reset will not matter if SHIB closes below the most recent low. The token will be pulled by momentum into the deeper liquidity pocket of the $0.0000070 zone. Because the oversold rebound was accompanied by actual buy volume, this scenario is currently the least likely — but it is still possible.