Why Ethereum Classic Is Building Power For An Explosive Move — And A Strategy To Trade It

Ethereum Classic ETC/USD was trading about 5% lower on Friday afternoon, representing the third straight day of consolidation for the crypto after it skyrocketed 116% between March 14 and March 22.

The continued consolidation has developed a quadruple 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 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, triple or quadruple 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.
• See Also: Here's How Much $100 Invested in Ethereum Classic (ETC) Right Now Would Be Worth If It Rediscovers All-Time High

The Ethereum Classic Chart: For the last three trading days, Ethereum Classic has traded within the range of the March 22 candlestick, which has settled the crypto into a quadruple bar pattern on the daily chart. The inside bars lean bullish in this case because Ethereum Classic was trading higher before forming the pattern.

• The consolidation has taken place on decreasing volume, which indicates the number of traders and investors who are both buying and selling the crypto is decreasing. The trading range of the mother bar is so great that Ethereum Classic could continue to create more inside bars until either big bullish or big bearish volume comes in and breaks the crypto up or down from the pattern.
• Ethereum Classic is consolidating in the pattern above the 200-day simple moving average (SMA), which indicates long-term sentiment is bullish. The 50-day SMA has begun to curl upward, and if Ethereum Classic can remain above the 200-day SMA, the 50-day SMA will eventually cross above the 200-day, which would cause a bullish golden cross to take place.
• The sideways consolidation has caused Ethereum Classic’s relative strength index to cool off from about 85% to a more comfortable 68%. When a stock or crypto’s RSI reaches or exceeds the 70% level, it becomes overbought, which can be a sell signal for technical traders.
• Ethereum Classic has resistance above at $47.93 and $50.74 and support below at $44.66 and $41.41.

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