The bearish resurgence of the $0.01195 mark pulled Shiba Inu [SHIB] towards its high liquidity range at the $0.01006 level. (For brevity, SHIB prices are multiplied by 1000 from now on).

As the price action dipped below the EMA ribbons, the bears revealed their increased vigor.

The current pattern reflects a tight phase near the point of control (POC, red). Any reversal of the EMA resistances can inflict a bearish volatile breakout. At press time, SHIB was trading at $0.01006.

SHIB 4 hour chart

Source: TradingView, SHIB/USD

Over the past month, SHIB has found an oscillation range in the region of $0.01195 to $0.0077. Near-term recovery prospects looked relatively weak as the EMA ribbons tilted south. In addition, volumes have also decreased. Thus, making the alt’s current position quite shaky.

With the price action hovering near the POC and EMA ribbons, SHIB would aim to break out of its compression phase and enter high volatility in the time ahead.

Additionally, the alt formed a bearish pennant-like pattern in the 4-hour time frame as momentum shifted towards the sellers. A drop below the ribbons would reaffirm selling resistance and increase the chances of a potential breakdown. In this case, the take profit levels could be in the $0.0094 area.

However, a recovery beyond the 23.6% level could provide the bulls with much-needed strength to invalidate the downtrends. The 38.2% level would limit buying efforts in this case.

Reasoning

Source: TradingView, SHIB/USD

The RSI has been moving sideways for almost a week now. An inability to sever midline ties would help sellers inflict drawdowns.

Interestingly, the lower lows of the OBV have diverged bullishly with the price action over the past couple of days. Thus, a short-term rebound from its immediate support seemed plausible. However, the directional trend of the altcoin [ADX] seemed noticeably low.

Conclusion

Given the confluence of several resistances near the 23.6% level and the POC, the bears might get a short-term advantage. A violation of its current seven-month pattern could trigger a short sell signal with take profit levels as suggested above.

But the alt shares a 28% 30-day correlation with Bitcoin. Therefore, keeping an eye on Bitcoin’s movement along with the general market sentiment could be key to making a profitable move.