• Shiba Inu (SHIB) has experienced a strong rally of more than 60% since the beginning of 2022, with its price surging by 17% in Wednesday’s market bounce.
• Technical charts and the relative strength index (RSI) suggest that Shiba Inu has been an excessively bought asset on a daily timeframe.
• A falling wedge pattern on the weekly chart is hinting at the possibility of another 75% rally from here.
The cryptocurrency market is experiencing a surge in prices, and Shiba Inu (SHIB) is no exception. The world’s second-largest memecoin has seen its value rise by more than 60% since the beginning of this year, with its price surging by 17% in Wednesday’s market bounce.
Technical analysis of the SHIB price action reveals that the coin has been an excessively bought asset on a daily timeframe. According to the relative strength index (RSI), which measures the magnitude of recent price changes to assess overbought or oversold conditions of an asset, the SHIB reading jumped to 86 on Wednesday, January 18, which is 16 points above the overbought threshold of 70. Usually, an overbought RSI might prompt investors to book profits and unload their positions, leading to price correction. Thus, Shiba Inu might drop back to its 300-day moving average of $0.00001120 as represented by the blue line in the chart.
On the weekly chart, there is also a clear formation of a bullish reversal pattern. Dubbed the falling wedge, this pattern builds up with the price trending lower inside a range defined by the descending, converging trendlines. If the price break above the upper trendline, it can be considered a bullish signal with further price gains ahead.
It is worth noting that the SHIB price rally is being fueled by the development of Shibarium, which is set to launch soon. The successful launch of Shibarium could potentially drive the SHIB price even higher, with some speculating that it could hit $0.10.
It remains to be seen how the SHIB price will perform in the near future, but the strong technicals and the upcoming launch of Shibarium suggest that the coin is well positioned for a rally. Investors should, however, remain vigilant and watch out for any signs of a potential price correction.
