Dogecoin (CRYPTO: DOGE) was trading about 3% lower on Tuesday after shooting up over 7% on Monday. The crypto has been struggling recently to regain 9 cents, trading below the level since May 18.
That may be set to change, however, because Dogecoin has settled itself into an inside bar pattern on the daily chart.
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 leans bullish because the crypto was trading higher before forming the pattern, but traders and investors can watch for a break up or down from Monday’s mother bar later on Tuesday or on Wednesday to gauge future direction. If Dogecoin finishes the 24-hour trading session without breaking up from the mother bar but with a lower wick, it indicates there is support at the 8-cent mark and the crypto is likely to make a bullish break on Wednesday.
- Dogecoin is trading in a confirmed uptrend, with the most recent higher high printed on May 27 at $0.09 and the most recent higher low formed at the $0.079 level on Sunday. For the trend to continue, Dogecoin will need to create another higher high before retracing downwards.
- Dogecoin is trading pinned between the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, which indicates indecision. If Dogecoin prints a higher high over the coming days, the crypto will regain the 21-day EMA as support, which would give bullish traders more confidence going forward.
- Dogecoin has resistance above near the 10-cent and 12-cent level and support below at $0.0.75 and $0.065.
See Also: Dogecoin Gains Are Eclipsed By Major Cryptos: Why This Doge Bull Says It's More Useful Than Bitcoin
