Shiba Inu, or SHIB, can possibly experience a pullback of nearly 25% to 30% following fears regarding the impressive price rally of the cryptocurrency in October. An important indicator shows that it is currently overvalued.
Shiba Inu’s RSI Foretells A Price Correction
The Relative Strength Index, or RSI, is a measure of how much an instrument’s price has changed recently. It uses that information to assess its overbought and oversold conditions. If it is more than 70, then the instrument is believed to be overbought.
On 3rd October, Shiba Inu surpassed the 70 point mark. 72 hours later, it peaked at about 94. The ideal scenario would be where the overbought reading causes a correction in its price. However, SHIB’s rally continued throughout the month. It rose more than 574% and reached its highest point in the previous 5 months on 26th October at $0.00004860.
At the same time, the RSI of Shiba Inu dropped. As a result, a wide divergence was created between the momentum and price of SHIB. This indicated that a weakness lay under the ongoing trend of the cryptocurrency, making a near-future pullback more likely.
Moreover, the last 3 price candles of SHIB’s daily chard showed consecutive highs as the day closed. At the same time, trading volumes declined 3 days consecutively. This further validates that there is a weakness underneath the trend of Shiba Inu.
Nevertheless, this doesn’t ensure that a price correction will immediately happen. A breakout following a Bull Pennant indicator’s formation suggests that bulls of Shiba Inu are targeting $0.0000522 next.
A graph made by Fibonacci Retracement suggested several levels that were previously important resistance and support levels. It shows that the upcoming downside target for the bears would be $0.00003466, about 25% to 30% lower than its current price.