What should traders look out for when Shiba Inu approaches the critical point?

Shiba Inu price is showing an opportunity to continue moving higher after the recent decline. While many altcoins have fallen following the sharp market correction, SHIB can recover quickly as it nears a key support point.

Strong growth potential

Shiba Inu price started accumulating after peaking at $0.0000319 on Feb 7th. Since then, the SHIB has shown falling volatility. However, this phase of price action is not necessarily a bad signal, as breakouts from consolidation are often followed by strong price action.

Shiba Inu is currently hovering above the four-hour demand zone, which ranges from $0.000027 to $0.0000288. A breakout of this barrier could trigger a new rally.

Considering the overall nature of the crypto market, it is likely that the SHIB will bounce off the immediate support. Therefore, investors can expect the market to reach $0.000324 after a 12% surge. Interestingly, Shiba Inu marked this level three times during the accumulation, creating a triple top and leaving tons of liquidity in the pending buy order. So, SHIB is likely to rise more than 12% and break out of the $0.000324 area to gather liquidity and form a local top.

SHIB Perpetual Futures Contract | Source: Trade View

Supporting this near-term bullish outlook for the SHIB is the recent drop in the deposit index to 4 for now from 12 on Feb 17th. Additionally, this number has also fallen below the 7-day moving average, suggesting that selling pressures are coming from short-term owners or dealers. This is a signal that it will be difficult to bet on the possibility of a market sell-off.

Active Deposit | Source: Santiment

While things are looking optimistic for the Shiba Inu, a drop below the demand zone, which lies between $0.000027 and $0.0000288, would spell disaster for the coin meme. A 4-hour candle close below $0.000027 will make a lower low, indicating that SHIB will continue falling.

In this situation, SHIB can drop back to the $0.0000235 support level. Since the accumulation takes place on February 5th and 6th, this area serves as a perfect platform for recreation. Therefore, a retest of the $0.0000235 area could be a good area for buyers to enter the market and trigger another rally.

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