Shiba Inu risks witnessing massive crash as SHIB confirms price-momentum divergence

Key Takeaways:

• Meme coin Shiba Inu faces a bearish price – momentum divergence after a 560% rally.
• CoinChapter’s earlier Shiba Inu price prediction played out as it gained 65% after the bullish Pennant.

YEREVAN (CoinChapter.com) – Shiba Inu, the Japanese hunt dog-inspired meme coin, recovered from Elon Musk’s Oct 25 tweet and climbed an additional 34% since Oct 25. It registered a new all-time high at $0.00004858 in the European session Tuesday. However, SHIB might not be wagging its tail for long as it flashed a bearish price-momentum divergence.

In detail, the relative strength index (RSI) is the momentum indicator that showed a divergence from the bullish price action. The RSI reflects how the traders view an asset’s capacity to provide returns. A strong RSI between 50 and 70 indicates their willingness to invest.

In a bearish divergence, the price registers higher highs, while the RSI charts lower highs. Thus, the shift in RSI bias might indicate a looming reversal for the asset.

Also read: Elon Musk slapped down Shiba Inu after SHIB soared 60% to a new ATH

Shiba Inu (SHIB) Price Prediction…

…registered the divergence since Oct 6. The indicator stood at 82 in the Tuesday session, which traders might construe as ‘overbought.’ In detail, if the RSI gets above 70, it flashes a red flag that it is time to pull the bets and secure profits. SHIB’s momentum indicator has been charting through ‘overbought’ territory for most of October.

As CoinChapter pointed out in an earlier review, Shiba Inu formed a bullish Pennant after its 310% surge from Sep 30-Oct 7. In hindsight, the Pennant featured two converging trendlines with a similar slope that constricted the price action.

The Pennant predicted a second bullish wave after exhausting the formation. SHIB complied with the prediction and surged another 65% since Oct 23.

Yet another factor supports the bearish outlook. Analytical platform Santiment suggests that meme cryptos like Dogecoin, Shiba Inu, and Elon have a common trait. The price action tends to decline when the social dominance and trading volume reach the top.

As seen on the chart below, SHIB’s social dominance is once again soaring. But, according to the platform, that signifies a looming value decline.

Also read: Shiba Inu falling wedge risks activating another super bearish pattern

If the bearish RSI divergence pans out, the SHIB price tank could see after a 560% rally. The digital asset currently ranks #13 among cryptocurrencies, with a market cap of $16.7 billion.