An analyst explained how Shiba Inu could be headed for a massive rally based on a bull flag pattern forming in its daily chart.
Shiba Inu recently consolidated inside a bull flag
In a new job on X, analyst Ali discussed a bull flag that recently appeared in the daily Shiba Inu price. THE bull flag is a technical analysis (TA) pattern that, as the name suggests, is shaped like a flag on a pole.
The pattern forms when an uptrend is followed by a period of consolidation within a parallel channel down. The starting uptrend constitutes the pole, while the channel acts as the flag.
Like other TA patterns, the consolidation channel or flag here includes two parallel lines. The upper level connects the price highs, while the lower level joins the lows.
When the asset retests either of these levels, it is likely to experience a reversal, with the upper line of the channel acting as the resistance point and the lower line as support.
A break above the resistance line is considered a bullish signal for the price. The uptrend resulting from such a breakout can be the same length as the flagpole.
On the other hand, a fall below the flag (i.e. a breakdown of support) invalidates the formation and may even suggest the resumption of bearish momentum for the asset.
Similar to the bull flag, there is also the bear flag in TA, which works in much the same way, except that it occurs during a downtrend (the flag meaning consolidation upwards after a descending pole).
Now, here is the chart shared by Ali that shows the bull flag pattern that Shiba Inu has potentially formed on its daily price recently:
The formation that the memecoin's price has been displaying during the last few weeks | Source: @ali_charts on X
From the chart, it is clear that the 1-day Shiba Inu price has been consolidating within what appears to be a bull flag channel over the past few weeks.
“I am placing buy orders around $0.000018343, aiming for a bullish breakout that sends $SHIB to $0.000072323,” the analyst explains. The first level is where SHIB should next encounter the flag support if it continues on its current trajectory, while the last objective is based on the height of the flagpole.
A run towards the bullish target of $0.000072323 would imply a rally of over 244% from the cryptocurrency's current spot price, while from the lower support of $0.000018343, such a rise would correspond to growth of more than 294%.
It remains to be seen whether Shiba Inu will post a breakout above this bull flag pattern and, if so, whether the price will benefit from the bullish effects.
SHIB Price
At the time of writing, the Shiba Inu is trading around $0.00002110, down over 18% over the past week.
Looks like the price of the coin has been heading down over the last few days | Source: SHIBUSD on TradingView
Featured image from Traxer on Unsplash.com, charts from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold investments and, naturally, investing involves risks. You are advised to carry out your own research before making any investment decision. Use the information provided on this website entirely at your own risk.