Dogecoin DOGE/USD was consolidating during Monday’s 24-hour trading session after surging over 50% between Nov. 21 and Sunday to reach a high of $0.107.
The consolidation was taking place within an inside bar pattern, which saw Dogecoin trading down about 4% from the Sunday session’s closing price.
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 has recently decoupled from Bitcoin BTC/USD and Ethereum ETH/USD, showing high levels of bullish volatility while the apex cryptos have traded slightly lower on mostly declining volume. Compared to Bitcoin and Ethereum, Dogecoin appears much more bullish headed into the next few trading days.
- During Monday’s 24-hour trading session, Dogecoin was holding steady near the $0.095 mark despite bearish price action in Bitcoin and Ethereum, as well as in the general market. If Dogecoin closes the trading day with a significant lower wick, the crypto will print a hammer candlestick, which could indicate higher prices will come during Tuesday’s session.
- Dogecoin’s inside bar leans bullish because the crypto was trading higher before forming the pattern and because the inside bar was printing near the upper range of Sunday’s mother bar. Bullish traders will want to see Dogecoin break up from Sunday’s range on higher-than-average volume later on Monday or on Tuesday, which will allow the crypto to reclaim the 10-cent area as support.
- Eventually Dogecoin will print a bearish reversal candlestick, which could indicate a retracement to the downside is on the horizon to print a higher low. When that happens, bullish traders would like to see the crypto hold above the 50-day simple moving average.
- Dogecoin has resistance above 10 cents at 12 cents and $0.135 and support below at $0.083 and $0.075.
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