The price of the Dogecoin-inspired meme cryptocurrency has been consolidating inside a structure that appears like a Bull Pennant.
The Shiba Inu (SHIB) market is in a very strong bull market in 2021, and one major continuation pattern on its longer timeframe charts highlights the scope for an additional 90% upside move ahead.
In detail, SHIB rose over 1,250% year-to-date (YTD) to establish the yearly high at $0.00003528 (data from Binance) on Oct. 8. Later, the cryptocurrency cracked under the profit-taking sentiment, leading to a 41.50% price correction to $0.00002060.
But bulls started accumulating SHIB near the said low level. A rebound ensued and the price rallied over 55% to $0.00003200, where it met another round of selloffs. Overall, the SHIB price kept forming lower highs and higher lows in the next sessions, forming a Triangle structure that appeared like a Bull Pennant.
Analysts treat Pennants as bullish continuation patterns, i.e., their formation, coupled with declining trade volumes, tends to send prices in the direction of their previous trend — by as much as the height of the previous price rally, also known as Flagpole.
So it appears, SHIB has been forming the same structure.
The SHIB Flagpole's height comes to be around $0.00002450. Therefore, considering the cryptocurrency would pursue a breakout to the upside from the Bull Pennant's apex (the level at which its upper and lower trendlines converge), its next target would be at around $0.00005200, roughly 90% higher.
Yet, Pennants are notorious for being the worst reliable technical indicators, at least according to a study conducted by Samurai Trading Academy's Cody Hind in 2020, based on his assessment of 10 years of market data and over 200,000 trading structures.
He found that Bull Pennants successfully reached their price targets in 54.87% of cases.
The SHIB price almost doubled in October in parts due to Tesla CEO Elon Musk's cryptic endorsement of the Shiba Inu project and amid reports of whale buying activity and the rise of its decentralized exchange ShibaSwap.
Soecifically, Musk posted the picture of his Shiba Inu puppy on Oct. 4. The billionaire entrepreneur's tweet coincided with the SHIB price rallying by more than 330% in the next four days, reminiscent of how he influenced the prices of Dogecoin (DOGE) earlier this year.
Floki Frunkpuppy pic.twitter.com/xAr8T0Jfdf— Elon Musk (@elonmusk) October 4, 2021
The jump also took cues from reports of whale buying activity in the Shiba Inu market. For the uninitiated, Yahoo Finance highlighted in his Oct. 5 report that an unknown entity purchased 6.2 trillion SHIB for circa $44 million in late September.
Meanwhile, Shiba Inu's namesake decentralized exchange ShibaSwap detected a surge in the amount held by its liquidity pools. As of Monday, the total value locked inside the ShibaSwap contracts was $411.42 million versus $253.41 million at the beginning of this month, as per data provided by DeFi Llama.
At its prime, in July 2021, ShibaSwap was managing $1.76 billion worth of funds via its liquidity pool.
Ishan Arora, a hedge fund manager associated with Tykhe Block Ventures, told Yahoo Finance that Shiba Inu emerged as a product of an ongoing craze for meme cryptocurrencies, adding that most people buy these tokens by merely following some influencers' advice.
Arora warned investors about the risks of putting money into such one-hit wonders, but mentioned Dogecoin for its ability to return incredible profits earlier this year.
"Early Doge investors last year did quite well, so it is not as black and white as most want it to be.”
Meanwhile, crypto data tracking service Santiment detected an increase in Shiba Inu whale transactions over $100,000 in the past 24 hours, noting that their occurrence is typically bullish for SHIB.
"When these transactions come in bunches, price rises generally follow," the platform wrote in a tweet published Monday.
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