Wish, GameStop, AMC Entertainment Stocks Consolidate In This Continuation Pattern: What's Next?

AMC Entertainment Holdings, Inc AMC, GameStop Corporation GME and ContextLogic, Inc WISH have developed inside bar patterns 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.

See Also: Starbucks Stock Must Negate This Bearish Pattern To See Further Upside

• 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.

The AMC Chart: AMC is trading in an inside bar pattern. The stock also has a bullish tweezer bottom pattern near the $36.70 level.

The GME Chart: GameStop is trading in a double inside bar pattern and within a pennant with an apex of Oct. 5

The WISH Chart: Context Logic is creating an inside bar pattern on Wednesday and holding above a newly created support level at its all-time low of $5.82. The stock needs to hold above this level or it could see new lows.

Photo: Brett Jordan on Unsplash