It’s been a wild ride for Shiba Inu (CCC:SHIB-USD). The cryptocurrency got hot in early October, then exploded higher at the end of the month.
I was looking for a bullish move in the cryptocurrency, but I didn’t necessarily think a 200% rally was in the cards in just a few days. As a result, Shiba Inu blew through all of my upside targets.
Now the crypto is settling down once again, leaving many to wonder what could be next. Since we used the charts to hone in on the previous rally, we’re wondering if we can do it again.
Let’s look at the technicals.
Trading Shiba Inu
Remember that we’re dealing with fractions of a penny here with Shiba Inu, so it can be somewhat frustrating to price this thing out. In any regard, I also want to use two charts. The first is a look at the weekly chart, highlighting some of the big-picture, long-term levels. The other will be a daily chart so we can really zoom in on the situation.
On the weekly chart to the right, you can see that SHIB is trading lower for a fourth straight week. It’s trading back into the prior high from May at $0.00003999, as well as the 10-week moving average.
If Shiba Inu can get back above the 10-week moving average (currently at $0.000042), aggressive bulls can be long against this week’s low.
A move back over $0.000042 would open the door to a potentially larger rebound. Over the week’s high at $0.00004795 and we could see a stronger move back to the upside.
Keep in mind, Shiba Inu can still double from current levels without making new all-time highs. However, that starts with finding support near the 10-week moving average and finding the momentum to give bulls a weekly-up rotation.
If this plays out — or if Shiba finds its footing in the future — any sort of move over the current high at $0.0000878 opens the door to the 261.8% extension, all the way up at $0.00009649.
That extension level is roughly 10% above the current all-time high, for some perspective. However, it’s worth mentioning that, should this occur, we will have new extensions to work with from the current range.
I don’t want to make it sound too complicated, because it’s really quite simple. If Shiba Inu finds its footing here, bulls can start looking at potential upside rotations with this week’s low as the downside risk level at $0.000044.
If Shiba cannot hold this week’s downside risk mark, it puts more downside in play. Specifically as we turn our attention to the daily chart, we can already see that the recent November low gave traders a near-perfect tag of the October high.
But if we break back below this level, it puts last month’s major breakout zone back on watch, between $0.00002409 and $0.0000323.
Below that and the newly established 200-day moving average could be on the table.
Is it really as simple as that, as far as the technical go? Yes, it really is that simple. Either Shiba Inu finds its footing and regains some bullish momentum or it remains under pressure.
The fact that it’s main inspiration for existence is to compete with Dogecoin (CCC:DOGE-USD) seems like it will limit its existence. With cryptocurrencies though, you can never be too sure.
Just look at the way the Squid Game coin collapsed. While it ended up being a scam, it goes to show just how quickly these assets can rise, then collapse.
There’s a major difference between Bitcoin (CCC:BTC-USD), Ethereum (CCC:ETH-USD) and other coins vs. cryptocurrencies like Dogecoin and Shiba Inu.
The former group exists as a store of value and a way to change digital transactions. The latter group mostly exists as speculation. There is no meaningful application that Shiba Inu serves (in my opinion) and that should limit its longevity.
If it was created to compete with Dogecoin (which it was) and if Dogecoin was created as a joke (again, it was), then it leaves me to believe that both of these cryptocurrencies will not have the longevity that Ethereum and Bitcoin should have.
There will be big moves in both directions that traders can capitalize on. However, there’s a massive difference in the quality of these holdings. That’s why I like to lean heavily on the technical in this case.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.