Dogecoin (CRYPTO: DOGE) was falling slightly during Monday’s 24-hour trading session on lower-than-average volume, consolidating above the 200-day simple moving average (SMA).
The consolidation is taking place within an 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 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 Dogecoin Chart: On Monday, Dogecoin was falling to test support at the 200-day SMA, which has happened on each of the last five days. The crypto regained the 200-day SMA as support on July 25 and has been trading mostly sideways since that date.
- The 200-day SMA is an important bellwether indicator. When a stock or crypto is trading above the area, it’s considered to be in a bull cycle. When a stock or crypto is under the 200-day, it’s in a bear cycle.
- The surge higher on July 24 and July 26, paired with the sideways trading, has settled Dogecoin into a possible bull flag pattern on the daily chart. If the pattern is recognized and Dogecoin breaks up from the flag on higher-than-average volume, the measured move is about 20%, which suggests the crypto could rise up toward the 9-cent level.
- If Dogecoin breaks down under the 200-day SMA, the crypto will also negate the bull flag. If that happens, a downtrend is likely to be confirmed.
- Dogecoin has resistance above at $0.083 and at $0.092 and support below at $0.075 and at $0.069.
Read More: Bitcoin, Ethereum Face Mass Exodus — Will XRP And Dogecoin Follow Suit?
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