The SHIB token has undergone a market adjustment, falling 27.54% after a strong breakout from a prolonged consolidation phase. For weeks, the cryptocurrency traded within a narrow range between $0.00001548 and $0.00002169, building momentum before breaking out and pushing its price to a local high of $0.00003344, consistent with the 1.0 Fibonacci extension level. This breakout was driven by market optimism and increased trading volume, showcasing strong bullish momentum.
However, the resistance near the peak triggered a significant pullback, bringing the cryptocurrency's price back to the ascending non-parallel channel, characterized by uneven slopes in movement. As of the time of writing, SHIB is trading close to the 0.236 Fibonacci retracement level at $0.00002513, which is a key support area and a critical level within the channel. Maintaining this support is crucial for determining the token's next move.
Can SHIB bulls regain control?
The separated ascending channel indicates that, although SHIB is in a correction phase, the overall trend remains bullish as long as the price adheres to the lower boundary of the channel. If this support holds, the token may rebound and seek to bounce back, targeting the 0.786 Fibonacci level at $0.00003106 as its first major resistance.
Successfully breaking through this level could pave the way for a retest of the recent high of $0.00003336 and extend to the 1.272 Fibonacci extension at $0.00003629, marking a new bullish milestone. However, failing to maintain the support at $0.00002513 could expose the cryptocurrency to greater losses, with the subsequent critical level at $0.00002259 potentially negating the current bullish sentiment. Falling below this level could signal a stronger bearish reversal, potentially pushing SHIB back to its previous consolidation range.
On-chain data indicates that SHIB will see more corrections in the future.
While technical analysis suggests possible support levels, on-chain indicators show a more cautious outlook for Shiba Inu. For example, the OI weighted funding rate chart reveals a concerning shift in trader sentiment. After a sustained positive funding rate in mid-November (reflecting bullish dominance), the funding rate has turned negative, currently at -0.0179%.
This shift indicates a growing preference for short positions, suggesting that market participants expect SHIB to decline further in the near term. The total liquidation chart further supports the bearish outlook, highlighting significant long liquidations on recent trading days. As of the previous day, the total liquidation amount for the cryptocurrency was about $11.6 million, with short liquidations amounting to $163,400 and long liquidations totaling $11.5 million.
This disproportionate liquidation of long positions highlights the vulnerability of overly leveraged longs, exacerbating selling pressure and intensifying the ongoing pullback. Exchanges like OKX and Bitfinex report the highest volume of long liquidations, underscoring the difficulty of maintaining bullish momentum in the broader market.
