Dogecoin (CRYPTO: DOGE) dipped more than 5% lower at one point on Friday after rallying 15.3% higher between March 22 and March 24, after breaking up from a bull flag pattern.
The crypto has now developed 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 or candles 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 or crypto 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.
See Also: Dogecoin Sees 111% Surge In Large Transactions Over 24 Hours
The Dogecoin Chart: Dogecoin’s recent ascent to a new March 24 high of $0.141 was not only propelled by the break of the bull flag pattern but also a strong uptrend the crypto began trading in on March 14 after printing a bullish triple bottom pattern near the 11-cent mark.
- When Dogecoin fell to its low-of-day on Friday, the crypto didn’t lose support of Thursday’s low-of-day, which has created an inside bar pattern. Traders and investors can watch for Dogecoin to make a break up or down from the mother later on Friday or on Saturday to gauge future direction.
- On Friday, when Dogecoin fell to its low-of-day at $0.127, buyers came in and bought the dip, which caused the stock to wick up from the area. The dip created was above the previous lower high formed on March 20 at $0.117, which indicates the next higher low in the uptrend has now been printed and the stock may trade higher over the weekend.
- If Dogecoin closes the 24-hour trading session above the 13-cent mark, it will print a hammer candlestick, which also indicates higher prices may come on the weekend.
- Dogecoin is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The crypto is also holding above support at the 50-day simple moving average, which indicates longer-term sentiment is bullish.
- Dogecoin has resistance above at $0.135 and $0.146 and support below at 12 cents and near the 11-cent mark.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
