Shiba Inu (CRYPTO: SHIB) was trading about 4.5% lower on Thursday in a second day of consolidation after over 21% higher on Tuesday, after Robinhood Markets Inc (NASDAQ:HOOD) announced it had listed the Dogecoin (CRYPTO: DOGE) competitor.
The price action on Wednesday and Thursday has taken place completely within Tuesday’s trading range, which has created a double 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 Shiba Inu Chart: Shiba Inu’s double inside bar pattern leans bullish because the inside bars are being formed near the top of the mother bar. The pattern also leans bullish in this case because Shiba Inu was trading higher before forming the inside bars.
- On Thursday, Shiba Inu fell down to the eight-day and 21-day exponential moving averages (EMA) to test the levels as support and bounced up slightly. As long as the crypto continues to hold above the eight-day EMA, the eight-day will continue to trend above the 21-day EMA, which may give bullish traders the confidence to remain in their positions.
- Thursday’s price action caused Shiba Inu to confirm it’s started to trade in an uptrend pattern, because the low-of-day price has created a higher low. If the pattern continues to play out, Shiba Inu will rise up to create a higher high above Tuesday’s high-of-day at the $0.00003 mark.
- If Shiba Inu continues to trade within Tuesday’s mother bar on Friday and perhaps into the weekend, the crypto may settle into a bull flag pattern on the daily chart. If it does, and the pattern is recognized, the measured move is about 36%, which indicates Shiba Inu could soar up toward the $0.0000344 area.
- Shiba Inu has resistance above at $0.00002640 and $0.00002958 and support below at $0.00002333 and $0.00002012.
