Bitcoin BTC/USD, Ethereum ETH/USD and Dogecoin DOGE/USD were trading in tight trading ranges on Sunday, and with far lower-than-average volume. The cryptocurrency sector has fallen into a lull recently, with decreased volatility, and on Sunday all three cryptos were forming inside bar patterns on their daily charts.
The cryptos look set to explode over the coming hours because their 24-hour trading ranges have become small and the volume so light, which is often followed by a big burst of volume to break a stock or crypto from the pattern. When the S&P 500 and Nasdaq futures open at 6:00 p.m. on Sunday, the direction the general markets look to take heading into the week may be the deciding factor to break Bitcoin, Ethereum and Dogecoin from their inside bar patterns.
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 and cryptos 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 Bitcoin Chart: On Sunday, Bitcoin was setting up a quadruple inside bar pattern, with all of the last four 24-hour candles inside April 13’s mother bar. The pattern leans bearish because Bitcoin was trading lower before forming the pattern.
- Bitcoin is also trading in a triangle pattern and is set to meet the apex of the triangle on Monday, traders can watch for a break up from the upper descending trendline of the pattern or the lower ascending trendline on higher-than-average volume to gauge future direction.
- At press time, Bitcoin’s trading volume was measuring in at about 2,284 on Coinbase compared to the 10-day average of 8,863.
- Bitcoin has resistance above at $42,233 and $45,814 and support below at $39,600 and $38,105.
The Ethereum Chart: Ethereum was trading in a single inside bar pattern on Sunday and, like Bitcoin, the crypto has also settled into a triangle pattern on the daily chart and is set to meet the apex of the triangle on Tuesday.
- Like with Bitcoin, traders and investors can watch for a break up or down from the triangle pattern on higher-than-average volume to gauge the next big move Ethereum will make. The direction Ethereum breaks will also cause the crypto to break from Saturday’s mother bar.
- Ethereum has resistance above at $3,057 and $3,240 and support below at $2,890 and $2,609.
The Dogecoin Chart: Dogecoin was trading in a double inside bar on Sunday, and also within a triangle pattern on the daily chart. Dogecoin is set to meet the apex of the triangle on Monday and, like with Bitcoin and Ethereum, traders and investors can watch for a break from the pattern on high volume to gauge future direction.
- Dogecoin’s volume at press time was far below average, measuring in at about 50 million on Coinbase compared to the 10-day average of over 280 million.
- Dogecoin has resistance above at $0.146 and 16 cents and support below at $0.135 and just above the 12-cent mark.