Shiba Inu eyes 50% rally as SHIB price enters ‘cup-and-handle’ breakout mode

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Shiba Inu (SHIB) broke out of the prevailing cup-and-handle pattern on August 14, raising the prospects of making additional profits in the coming weeks.

Shiba Inu can rise 50%

A cup-and-handle appears when the price falls and rises in a U-shaped trajectory in the first stage, followed by a rapid sideways or downward move in the second. In particular, the price trend develops below a common resistance level.

Typically, head-and-handle patterns resolve after the price breaks above the resistance level; SHIB did the same on August 14 after rising 27% to $0.000016 as shown below.

SHIB/USD daily price chart. Source: TradingView

According to the rule of technical analysis, a cup and handle breakout target is determined by measuring the distance between the lowest point of the pattern and the resistance line and adding it to the breakout point. As a result, SHIB could move towards $0.00002253.

In other words, a price increase of 50% by September.

Still a nonsensical rally?

Fundamentally, Shiba Inu’s 27% intraday price rally on August 14 had no visible catalysts except for a stat that showed SHIB’s burn rate increased 825% in a day. But the amount of SHIB burned is only worth more than $4,500.

Burn rate of Shiba Inu. Source: Shibburn.com

Overall, however, the Shiba Inu network has burned over $6.36 million worth of SHIB tokens during its lifetime.

In addition, the Shiba Inu rally came nearly ten days after Binance announced it would add SHIB support to its payment cards issued in Europe. By doing so, the crypto exchange increased SHIB’s potential to find new users in the emerging European cryptocurrency space.

Weak fundamentals, however, could offset SHIB’s technically bullish bias, as cup-and-handle lineups only have a 61% success rate in meeting their profit targets, according to veteran analyst Tom Bulkowski.

Related: 3 Cryptocurrencies That Outperform ETH Price Thanks to Ethereum’s Merge

Therefore, a failed head-and-handle breakout — even with a pullback from the 200-day exponential moving average (200-day EMA; the blue wave in the chart below) near $0.00001755 — SHIB could trigger an initial correction toward $0.00001306, 20% lower than today’s price.

SHIB/USD daily price chart. Source: TradingView

Shiba Inu’s head-and-handle setup could fizzle due to the token’s overbought daily relative strength index (RSI). Notably, the RSI has moved above 70, typically resulting in a period of sideways consolidation or correction.

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