Shiba Inu (SHIB) broke out of its predominant “cup and handle” pattern on August 14th, raising its prospects for additional gains in the coming weeks.
Shiba Inu could fly 50%
A cup and handle appear when the price falls and rises in a U-shaped path in the first stage, followed by a quick sideways or downward movement in the second. In particular, the price trend develops under a common resistance level.
Cup and handle patterns usually resolve after the price breaks above the resistance level; SHIB followed suit on Aug 14 after rising 27% to $0.000016, as shown below.
According to the rule of technical analysis, a cup and handle breakout target is determined by measuring the distance between the low point of the pattern and the resistance line and adding it to the breakout point. As a result, SHIB could head towards $0.00002253.
In other words, a 50% price rally for September.
A pointless rally, though?
Crucially, the Shiba Inu’s 27% intraday price rally on August 14 had no visible catalysts except for a metric showing the SHIB burn rate increased 825% in one day. But the amount of SHIB burned is worth only more than $4,500.
Overall, however, the Shiba Inu network has burned over $6.36 million worth of SHIB tokens over its lifetime.
Furthermore, the Shiba Inu rally came almost ten days after Binance’s announcement to add SHIB support on its European-issued payment cards. In doing so, the cryptocurrency exchange elevated SHIB’s potential to find new users in the emerging European cryptocurrency space.
We are pleased to announce that @binance has added SHIB to the list of supported tokens for Binance Card issued in Europe.
You can now pay with SHIB at over 60 million merchants worldwide. Plus get up to 8% cash back and zero annual or FX fees! https://t.co/0Xj7IXPyt0 pic.twitter.com/FqINtnHFWx
— Shib (@Shibtoken) August 5, 2022
However, weak fundamentals could offset SHIB’s technically bullish bias, given that cup and handle setups have only a 61% success rate in meeting their profit targets, according to veteran analyst Tom Bulkowski.
Related: 3 Cryptocurrencies Beating the Price of ETH Thanks to Ethereum’s Merge
Therefore, a failed cup and handle breakout, also on a retracement of the 200-day exponential moving average (200-day EMA; the blue wave on the chart below) near $0.00001755, could cause SHIB to eye a correction. initial towards $0.00001306, 20% less than today’s price.
The Shiba Inu cup and handle setup could fail due to the token’s overbought Daily Relative Strength Index (RSI). In particular, the RSI has crossed above 70, which usually results in a period of consolidation or sideways correction.
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