Dogecoin graphic fractal endangers 390% rally of Shiba Inu

Shiba Inu (SHIB) has emerged as one of the best investments towards the fourth and last quarter of 2021, with its price rising more than 390% in the first week of October. However, the cryptocurrency meme now runs the risk of wiping out most of these gains in upcoming sessions.

Yuriy Bishko, a market analyst based in Ukraine, discussed the potential downside scenario based on recent Shiba Inu price trends, which look eerily similar to those recorded in the Dogecoin (DOGE) market earlier this year.

For example, the October price hike of SHIB followed five months of consolidation within a price range of $0.00000398. Likewise, the DOGE’s sideways trend in February-April 2021, where its bids jumped between $0.0471 and $0.0630, served as the basis for a 500% increase in late April.

DOGE/USDT x SHIB/USDT daily chart. Source: Yuriy Bishko, TradingView.com

Bishko says traders who bought Shiba Inu tokens during the sideways consolidation phase should sell at least 20% to 30% of their positions if they are still holding after the rally. Meanwhile, if the SHIB’s net break range exceeds 500%, traders are likely to divest another 70%-80% of their net holdings.

This is mainly because the supersonic rise in Dogecoin prices at the end of April resulted in a correction of around 60%. Bishko added:

“If SHIB repeats the same pattern, [os traders] can buy more coins at a 60% discount.”

SHIB resumes uptrend

The profit-taking strategy emerged when the Shiba Inu resumed its bullish trend on Friday (8), after falling 41% on a price correction in the previous session.

The SHIB rose nearly 27.5% to hit an intraday high of $0.00002919, very much in line with similar upward moves across all major crypto-assets, including Bitcoin (BTC) and Ether (ETH). Small cap tokens generally follow trends in cap markets; for example, the 390% rise in the price of SHIB in the quarter (QTD) coincided with the 30% rise in Bitcoin in the same period.

SHIB/USDT daily chart. Source: TradingView.com

At the same time, Shiba Inu’s daily relative strength index (RSI) identified the current cryptocurrency price valuations as overbought. Analysts consider an RSI reading above 70 to be overvalued for an asset, typically following a price correction or sideways consolidation.

Bleeding Crypto, a Twitter-based independent market analyst, anticipated that SHIB would retest the session high of $0.00003528. The pseudonym analyst cited a Fibonacci retracement chart behind its bullish continuation setting, noting that SHIB’s ability to rebound strongly after falling nearly 50% means “it’s getting back into business”.

$SHIB Looks like 50% FIB is enough for $SHIB and is getting back to business. Very impressed. I missed that whole train, but I still like to admire AT. Good luck guys! pic.twitter.com/Ql9NI3rL0t

– Crypto Bleeding (@Bleeding_Crypto) October 8, 2021

Shiba Inu’s fundamentals seem to agree

As the Cointelegraph discussed earlier, the team behind the cryptocurrency is trying to become a competitor in the DeFi space. In detail, it launched ShibaSwap, a decentralized cryptocurrency exchange platform, in early July 2021, which now has more than $360 million locked in its liquidity pool.

In addition, Shiba Inu speculators have also shown interest in next week’s release of 10,000 non-fungible tokens (NFTs), dubbed “Shiboshi”.

The views and opinions expressed herein are those of the author alone and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you must conduct your own research when making a decision.

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