Shiba Inu price shows an affinity to move higher after the recent downswing. While many altcoins have dropped following the big crypto’s lead, SHIB could be quick in recovery as it approaches a crucial support floor.
Possibility of a relief rally
Shiba Inu price began its consolidation after a local top at $0.0000319 on 7 February. Since then SHIB has continued to coil up, signaling a reduction in volatility. However, this phase of the price action is not necessarily bad as a breakout from the consolidation is often seen with a massive move in price.
As of now, Shiba Inu price is currently hovering above the four-hour demand zone, extending from $0.0000270 to $0.0000288. A bounce off this barrier is likely to trigger a quick run-up for the meme coin. Likewise, a breakdown of this demand zone with a four-hour candlestick close below $0.000027 will suggest that a downswing is likely. Therefore, Shiba Inu price seems to be stuck evaluating the directional bias.
However, considering the overall nature of the crypto markets, a bounce from the immediate support level seems likely. Hence, investors can expect Shiba Inu price to rally to $0.0000324 after a 12% ascent. Interestingly, SHIB tagged this level thrice during its consolidation, creating a triple top setup and leaving behind a ton of buy-stop liquidity. So, the 12% run-up is likely to extend beyond $0.0000324 to collect the liquidity and form a local top.
Supporting this short-term bullish outlook for SHIB is the recent decline in the active deposits metric from roughly 12 on 17 February to 4 as of this writing. Moreover, the count has also dipped below its 7-day moving average, indicating that the sell-side pressure is declining from short-term holders or traders. This development indicates that a potential sell-off is unlikely for Shiba Inu.
Active deposits | Source: Santiment
While things look optimistic for the Shiba Inu, a breakdown of the demand zone, ranging from $0.0000270 to $0.0000288 will spell disaster for the meme coin. A four-hour candlestick close below $0.0000270 will create a lower low and suggest that the coin is due for a further retracement.
In this situation, Shiba Inu price could retrace to the $0.0000235 support level. Due to the consolidation that took place on 5 and 6 February, this area serves as the perfect platform for recovery. Therefore, a retest of $0.0000235 could be the footing required for buyers to band together and give the bull rally another go.