Shiba, one of the biggest meme coins, has been in a downtrend since it reached a local peak at around $0.00005176 in February 2023. However, the price has reached a long-term support area that could signal a potential trend reversal. The bears will recognize that Shiba is at a major support level and has also formed a triple bottom pattern, which potentially indicates an incoming bullish trend, and will start to pull out and observe what happens next. Can the bulls use this chance to pick up momentum and reverse this current heavy downtrend?
A Triple Bottom is a chart pattern that consists of three equal lows followed by a break above resistance. The chart pattern is categorized as a bullish reversal pattern. All three highs should be reasonably equal, well-spaced, and mark clear turning points to establish support.
The above image displays SHIB/USD on the weekly time-frame with a triple bottom pattern already fully formed and price (as at the time of writing) at $0.00000786. On the SHIB/USD chart, the support area is marked blue and the three lows required are present and marked by the three white arrows.
Shiba had reached an all-time high (ATH) of $0.00008864 in late October 2021 then decreased all the way to $0.00000715 in mid-June, 2022, creating the first bottom in the pattern. Subsequently, the second bottom was created at $0.00000779 at the support area in December 2022 after the price had gone all the way up to $0.00001794 in August 2022; and the third bottom has just been created currently, after falling from the February high at $0.00005176.
The selling pressure has expectedly faded upon making the third low, but that does not automatically indicate a clear reversal yet. Sellers are merely reacting to it because it’s a support area and they want to protect their trade and wait for a clear confirmation of trend continuation before entering another trade or they might not enter at all if it proves unfavorable. Buyers may also already be “buying the dip”, hence counteracting the selling pressure. Whatever the case may be, the best thing to do is wait and observe.
To show a clear trend reversal, the price has to break the neckline also acting as resistance (red area pointed by the blue arrow). If the price can break that resistance, then it will be a good confirmation that buying pressure is now high enough to dominate the selling pressure, especially if it breaks it with high velocity.
However, if patience has failed to endure till the break of the neckline, there is an alternative in place, although less safe than waiting for the neckline break. A tighter and earlier entry is available if the daily chart is quickly analyzed.
The daily chart displays a minor downtrend as opposed to the weekly chart. An entry can be made upon the breakage of the trendline resistance as that would signal8 minor buyer strength and short-term bullish momentum, possibly catching the “big move” much earlier than others.
Featured image: Shutterstock
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Dominic Jubemi is primarily into legal practice. However, he has taken interest in building and grooming fundamental skills in FX and Crypto trading, audio engineering and in the nearest future, fiction writing.