Shiba Inu Price Analysis: SHIB Poised to Retest $0.00001320 Ahead of Fed Meeting

The Federal Reserve meeting is expected to convene today and publish its closely watched interest rate decision in the afternoon and the market’s consensus is that no changes will be made to the Federal Funds Rate.

Donald Trump’s hostile measures against key commercial allies of the U.S. like Mexico, Canada, and China have raised the odds that inflation could spiral out of control once again.

Cryptocurrencies are highly susceptible to interest rate decisions as they are risky assets whose demand is influenced primarily by the market’s mood.

If the Fed’s concerns about inflation exacerbate as a result of Trump’s latest decisions, this could lead to changes in their dot plot and further lower the odds of another interest rate cut this year.

However, market participants seem to be in a good mood today as most cryptocurrencies are rallying during the Asian session. Other meme coins like Dogecoin (DOGE) and Pepe (PEPE) have also surged by 3.2% and 7.2% in the past day.

Powell’s Comments Could Have a Huge Influence on Meme Coins

Shiba Inu (SHIB) is the most resilient meme coin within the top 10 with annual losses of 39.4%. Comparatively, DOGE and PEPE have shed 45.7% and 64.7% during this same period.

This meme coin’s robust ecosystem, which includes a decentralized exchange (Shibaswap), layer-two blockchain (Shibarium), and even a magazine called The Shib, has made it one of the most popular tokens in the space amid its loyal fan base.

Despite today’s significant uptick, trading volumes have gone down by 17% in the past 24 hours, meaning that a group of market participants have not bought into the bullish narrative, especially as Fed meetings tend to trigger a spike in volatility.

Shiba Inu’s daily chart shows that the token bounced off the $0.00001150 area last week and has been rising slowly since then. Momentum indicators have moved to positive territory and the Relative Strength Index (RSI) already sent a buy signal while the MACD’s histogram shows that positive momentum is steadily rising.

However, SHIB is still on a downtrend unless it can jump above $0.00001550 in the near term. The Fed’s comments today could have a significant impact on that depending on how hawkish they are.

If Chairman Jerome Powell’s speech indicates that the odds of another interest rate cut are lower than before given the current situation on the trade front, this could plunge SHIB and other meme coins below key support levels rapidly.

Meanwhile, if the opposite occurs and his comments support a dovish stance, SHIB could rally and reverse its downtrend in the near term.

SHIB Exhibits Bearish Structure in the Hourly Chart

Moving to the lower timeframe, SHIB has been rallying since the American session closed yesterday. However, the price action has made two consecutive lower highs recently and two lower lows as well, meaning that the token is on a downtrend.

Momentum indicators favor a bullish outlook heading to the American session. However, the moment of truth will come once SHIB retests the $0.00001320 level – its most recent lower high.

If the price pulls back and momentum readings turn bearish, short-sellers would have the upper hand, especially ahead of the Fed meeting – a time when investors approach the market cautiously and progressively dump their positions just hours before Powell’s speech to avoid an unexpected reversal.

If positive momentum spills over to the American session, late buyers have the chance to participate with a favorable risk-reward ratio of 1.75 if they manage to scoop up some SHIB tokens at around $0.00001273 or lower.

The stop price in this case would be set below the $0.00001265 area support-resistance line and the target at SHIB’s most recent lower high.