Dogecoin (CRYPTO: DOGE) was trading over 3% lower on Monday, in continued consolidation after a 5.5% decline on Saturday, which Benzinga called out the day prior.
Since then, Dogecoin has been trading in a sleepy sideways pattern, trading within a 1-cent range in consolidation.
Sunday and Monday’s price action, which has taken place completely within Saturday’s range, has settled Dogecoin into an inside bar pattern. An inside bar pattern indicates a period of consolidation and is usually followed by a continuation move in the direction of the current trend.
An inside bar pattern has more validity on larger time frames (four-hour chart or larger). The pattern has a minimum of two candlesticks and consists of a mother bar (the first candlestick in the pattern) followed by one or more subsequent candles. The subsequent candle(s) must be completely inside the range of the mother bar, and each is called an "inside bar."
A double, or triple inside bar can be more powerful than a single inside bar. After the break of an inside bar pattern, traders want to watch for high volume for confirmation the pattern was recognized.
- Bullish traders will want to search for inside bar patterns on stocks or cryptos that are in an uptrend. Some traders may take a position during the inside bar prior to the break, while other aggressive traders will take a position after the break of the pattern.
- For bearish traders, finding an inside bar pattern on a stock that's in a downtrend will be key. Like bullish traders, bears have two options of where to take a position to play the break of the pattern. For bearish traders, the pattern is invalidated if the stock rises above the highest range of the mother candle.
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The Dogecoin Chart: Dogecoin was falling on Monday on lower-than-average volume, which further confirms the crypto is in a consolidation phase as opposed to experiencing fear-induced selling. At press time, Dogecoin’s trading volume on Coinbase was measuring in at about 115 million, compared to the 10-day average of 415.51 million.
- Dogecoin’s double inside bars lean bearish, because the crypto was trading lower before forming the pattern. If Dogecoin breaks down from the lowest price in Sunday’s candlestick on higher-than-average volume, traders can watch for an accelerated move to the downside.
- If Dogecoin drops through Sunday’s low-of-day on light volume, the crypto may find support at the descending trendline Dogecoin broke up bullishly through on April 25. On Sunday, Dogecoin tested the trendline as support and wicked up from the area.
- There is a possibility Dogecoin may form a third inside bar on Tuesday, as the crypto works its way into a tightening pattern, with in increasingly tight 24-hour trading range. If the crypto does, traders and investors can watch for a triangle pattern to develop and then for Dogecoin to eventually break up or down from that pattern in order to gauge future direction.
- Dogecoin has resistance above at $0.135 and $0.146 and support below just above 12 cents and at the 10-cent level.
See Also: Dogecoin Daily: Elon Musk Reacts To Mark Cuban's Idea And More
Photo: Courtesy of CryptoWallet.com Images on Flickr
