SHIB Retraces 27% After Breakout: Can Bulls Regain Control?

The SHIB token has experienced a market correction, losing 27.54% after a strong breakout from a prolonged consolidation phase. For weeks, the cryptocurrency traded in a narrow range between $0.00001548 and $0.00002169, building momentum before a breakout propelled its price to a local high of $0.00003344, aligning with the 1.0 Fibonacci extension level. This breakout, fueled by increased market optimism and trading volume, showcased strong bullish momentum.

However, resistance near the peak triggered a sharp retracement, bringing the cryptocurrency’s price back into an ascending disjoint channel, a pattern characterized by uneven-sloping movements. At press time, SHIB trades near the 0.236 Fibonacci retracement level at $0.00002513, a critical support zone and a key level within the channel. Holding this support will be crucial for determining the token’s next move.

Can SHIB Bulls Regain Control?

The disjoint ascending channel indicates that while SHIB is in a correction phase, the overall trend remains bullish as long as the price respects the channel’s lower boundary. If this support holds, the token could bounce back and aim for a recovery, targeting the 0.786 Fibonacci level at $0.00003106 as its first major resistance.

A successful move past this level could pave the way for a retest of the recent high at $0.00003336 and extend toward the 1.272 Fibonacci extension at $0.00003629, marking a new bullish milestone. Nevertheless, a failure to hold support at $0.00002513 could expose the cryptocurrency to more profound losses, with the successive key level at $0.00002259 invalidating the current token’s bullish sentiment. Breaking below this level could signal a more potent bearish reversal, possibly driving SHIB back to its prior consolidation range.

On-Chain Data Suggests More Correction Ahead for SHIB

While the technical analysis hints at probable support levels, on-chain metrics present a more cautious outlook for Shiba Inu. For instance, the OI-weighted funding rate chart reveals a concerning shift in sentiment among traders. After sustained positive funding rates throughout mid-November—reflecting bullish dominance—the funding rate has turned negative, now at -0.0179%.

This shift indicates a growing preference for short positions, suggesting that market participants expect further downside for SHIB in the near term. Further supporting the bearish outlook, the total liquidations chart highlights massive long liquidations in recent trading sessions. As of the previous day, the cryptocurrency’s liquidations totaled approximately $11.6M, with $163.4K in short liquidations compared to $11.5M in longs.

This disproportionate liquidation of long positions stresses the vulnerability of over-leveraged bulls, exacerbating selling pressure and contributing to the ongoing correction. Exchanges such as OKX and Bitfinex reported the highest long liquidations, emphasizing the broader market’s struggle to maintain bullish momentum.

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