Bitcoin (CRYPTO: BTC), Dogecoin (CRYPTO: DOGE) and Ethereum (CRYPTO: ETH) have developed bar patterns inside the daily chart. An inner bar pattern indicates a period of consolidation and is usually followed by a continuation movement in the direction of the current trend.
An inner bar pattern has more validity over longer periods (chart of four hours or more). 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 following candle (s) must be completely within the range of the mother bar and each is called an “inner bar”.
A double or triple inside bar can be more powerful than a single inside bar. After breaking an inside bar pattern, traders want to watch a high volume as confirmation that the pattern has been recognized.
- Bullish traders will want to look for inner bar patterns on stocks that are in an uptrend. Some traders may take a position during the inside bar before the breakout while other aggressive traders will take a position after the pattern breaks.
- For bearish traders, finding an inside bar pattern on a downtrend stock will be essential. Like bullish traders, bears have two options to take a position to play the pattern breakout. For bearish traders, the setup is invalidated if the stock breaks the upper range of the parent candle.
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The Bitcoin chart: Bitcoin was printing an inside bar on the daily chart just above a support level at $ 42,223. The crypto is trading in a short bullish trend in a wider bearish trend. Bitcoin will need to peak above the $ 55,200 level to confirm that the downtrend is over.
The Dogecoin table: Dogecoin is trading in a strong downtrend but is holding above a key support level of $ 0.197. The crypto inside bar on Saturday demonstrates consolidation. If Dogecoin loses support at its key level, it could drop towards the 16 cent mark.
The Ethereum chart: Like Bitcoin, Ethereum may be trying to reverse the trend in an uptrend, but will need to break above Thursday’s high of $ 3,182 for confirmation. Otherwise, the crypto could continue to fall in its biggest downtrend after Saturday’s inner bar.