Dogecoin (CRYPTO: DOGE) was trading more than 4% lower at one point on Friday in sympathy with Bitcoin (CRYPTO: BTC) and the S&P 500, which were falling 4% and 1.7%, respectively, in yet another bearish day for the markets.
As of press time, Dogecoin was holding above Thursday’s low-of-day and because the crypto didn’t rise above Thursday’s high-of-day, it 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 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’s inside bar pattern is neutral in this case because the crypto has been trading mostly sideways since falling bearishly from a triangle pattern Wednesday. Traders and investors can watch for a break up or down from Thursday’s mother bar later on Friday or on Saturday to gauge future direction.
- Dogecoin’s volume on Friday was far below average, which coincides with a sleep consolidation pattern and indicates there is currently a lack of interest in the crypto. At press time, Dogecoin’s volume was measuring in at just 94 million on Coinbase Global Inc (NASDAQ:COIN), compared to the 10-day average of 395.97 million.
- If Dogecoin breaks up from the inside bar pattern, the crypto will regain support at the eight-day exponential moving average, which would be a positive sign for the bulls. If the crypto can’t regain that level as support, the bears will be happy to watch the indicator continue to push Dogecoin lower.
- Dogecoin has resistance above at 10 cents and the 12-cent level at support below at $0.065 and the psychologically important 5-cent mark.
