Shiba Inu (SHIB) Price Action At A Critical Juncture, Descending Channel's Support Line Is Key

Despite significant challenges, Shiba Inu (SHIB) displayed notable resilience in the midst of a broader market crash.

Despite a broader market crash, Shiba Inu (SHIB) price showed resilience with a 16% gain on July 5.

The memecoin's price declined over 26% since July 3, dropping to a daily low near $0.0000128 on July 5 before recovering, hinting at strong buying sentiment at lower price levels.

Shiba Inu Bullish Cues Amidst Challenges

SHIB has seen a remarkable 466% increase in its weekly burn rate. According to Shibburn X, the mechanism burned over 364 million SHIB tokens in the last seven days.

The increase in the weekly burn rate suggests that the community is likely driving scarcity and long-term value. Also, the burn activity hints at a strategic effort to manage supply, which could lead to a more favorable supply-demand balance over time.

This is especially relevant as the broader market recovers, putting SHIB in a good position for potential price appreciation.

Moreover, crypto exchange BitMEX unveiled MEMEMEXTUSDT, a Basket Index perpetual swap contract for top meme coins. The investment vehicle allows traders to access a diversified portfolio of leading memecoins via a single instrument, with SHIB being a part of the basket of tokens.

SHIB Price Testing Channel Support

Shiba Inu's price rose by over 16% on July 5, bucking the wider market bearish trend. The memecoin continued the uptrend on July 6 as bulls tried to flip the $0.000015 resistance into support.

However, SHIB price moving inside a descending channel pattern complicates matters. Currently, SHIB is hovering near the channel's support line, suggesting a potential rebound from this level.

If SHIB can hold this support, a recovery rally could see the price rise to the 0.00001579 resistance level, which corresponds to the 61.8% Fibonacci retracement. Further upward momentum could target the 20-day EMA (red wave) resistance at 0.00001787, close to the 78.6% retracement.

On the other hand, if selling pressure persists, SHIB could drop to the support level around 0.00001334, aligning with the 38.2% Fibonacci retracement. A break below this level might see the price test the stronger support at 0.00001190, corresponding to the 23.6% retracement.

The token is trading below its 20, 50, 100, and 200-day EMAs, indicating a bearish trend. The RSI is currently at 29.81, suggesting SHIB is in oversold territory and may see a potential rebound.

Shiba Inu's price action is at a critical juncture and the descending parallel channel's support line is a key factor to watch for a potential reversal.

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