Bitcoin BTC/USD continued to consolidate Friday after surging over 10% on Monday, amid increased optimism that the first spot Bitcoin ETF will soon be approved.
Ethereum ETH/USD and Dogecoin DOGE/USD were trading in tandem with the apex crypto but saw some bearish price action drop them from their inside bar patterns.
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.
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The Bitcoin Chart: Bitcoin topped out near the $35,150 mark on Tuesday and Wednesday and was unable to break through that area. All the price action since Tuesday has taken place inside that day’s range, which has settled the crypto into a triple inside bar pattern, which leans bullish for continuation.
The series of inside bars have also formed on lower-than-average volume, which helps to verify the inside bar patterns are being recognized. The tightening trading range also has Bitcoin forming a possible bull flag pattern, with a measured move of about 10%.
Bullish traders want to see Bitcoin continue to consolidate so the crypto’s relative strength index (RSI) continues to lower, which could give the crypto enough power to break up from the mother bar and possible bull flag pattern. Bearish traders want to see big bearish volume come in and drop Bitcoin under the eight-day exponential moving average, which could accelerate downside pressure.
Bitcoin has resistance above at $35,593 and at $38,105 and support below at $31,862 and at $31,418.
Ethereum and Dogecoin’s RSI levels are measuring in overbought territory, and continued consolidation will help to drop the indicator. Bullish traders want to see Dogecoin’s and Ethereum’s RSIs come down under 70% and then for big bullish volume to enter and drive the cryptos above Wednesday’s high-of-day.
Bearish traders want to see big bearish volume cause Ethereum and Dogecoin to close Friday’s trading session under the 200-day SMA, which would indicate the recent push above that level was a bull trap.
Ethereum has resistance above at $1,835 and at $1,937 and support below at $1,717 and at $1,615.
Photo via Pixabay.
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