- Shiba Inu price reverses cup-with-handle breakout with the largest negative day since June 21.
- SHIB daily Relative Strength Index (RSI) reaches the first overbought reading since the May crash.
- The union of the 50-day simple moving average (SMA) with the handle low of $0.00000711 needs to hold to keep the breakout live.
Shiba Inu price shaped a cup-with-handle base through July and early August before triggering on August 16 with a daily close above the handle high of $0.00000887. The breakout has quickly introduced profit-taking, suggesting a bear trap and putting the 36% measured move of the SHIB base in doubt.
Shiba Inu price plots new opportunity, but investors are not convinced
On August 16, Shiba Inu price triggered a constructive base after weeks of false attempts or erratic price structures. However, the breakout was met with a -10.75% reversal on August 17, marking the most significant daily decline since June 21. The potential bear trap has put SHIB investors on the defensive, with the meme token showing a double-digit loss from the handle high entry price.
The lack of conviction and resulting Shiba Inu price reversal has spotlighted the support framed by the 50-day SMA at $0.00000729 with the handle low of $0.00000711. It is the make-or-break level for the cup-with-handle breakout based on a daily close, and it would represent a loss of 20% from the SHIB handle high entry price.
A failure to hold $0.00000711 would quickly flip the Shiba Inu price outlook to bearish, exposing SHIB to a test of the July 20 low of $0.00000570 or the June low of $0.00000550 and a loss of -22.64% from the handle low.
SHIB/USD daily chart
The sharp reversal on August 17 may be a brief reaction to the overbought reading on the daily RSI and not a bull trap. To confirm a renewal of the breakout, Shiba Inu price needs to log a daily close above the breakout high of $0.00000949 printed on August 16. Otherwise, SHIB speculators will be locked in a directionless cryptocurrency, undermining the base legitimacy and the bullish narrative developing since the 23.30% bounce on August 7.
With the cryptocurrency market manufacturing impressive gains in several altcoins, Shiba Inu price finally caught a bid, thrusting SHIB from a constructive base, but investors’ conviction barely lasted a day. It is a reminder of the challenges inherent in trafficking in outlier cryptocurrencies and now emphasizes the importance of $0.00000711.
Here, FXStreet's analysts evaluate where SHIB could be heading next as it seems primed for a correction before another run-up.
