Ethereum Classic ETC/USD was trading over 4% lower at one point on Friday in sympathy with Bitcoin BTC/USD and the S&P 500, which were falling 4% and 1.7%, respectively, in yet another bearish day for the markets.
As of Friday afternoon, Ethereum Classic was holding above Thursday’s low-of-day. Since the crypto didn’t rise above Thursday’s high-of-day, it has settled Ethereum Classic into an inside bar pattern.
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, 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 or 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 or crypto 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 Ethereum Classic Chart: Ethereum Classic’s inside bar pattern leans bullish in this case because the crypto has been trading slightly higher since May 12, when a dip to the $15 level was bought by the bulls. Traders and investors can watch for a break up or down from Thursday’s mother bar later on Friday or on Saturday to gauge future direction.
- Ethereum Classic is also trading in a falling channel pattern on the daily chart, which is considered to be bearish until a stock or crypto breaks up from the upper descending trendline of the pattern on higher-than-average volume. On Friday, the crypto attempted to break from the pattern but lacked the volume that is necessary.
- In fact, Ethereum Classic’s volume on Friday was lower-than-average, which coincides with consolidation and indicates a lack of interest in the crypto. At press time, Ethereum Classic’s volume was measuring in at just 128,138 on Coinbase, compared to the 10-day average of 224,857.
- If Ethereum Classic breaks up from the inside bar pattern, the crypto will regain support at the eight-day exponential moving average, which would be a positive sign for the bulls. Bearish traders will want to see the EMA continue to act as heavy resistance, guiding the crypto lower.
- Ethereum Classic has resistance above at $20.45 and the 24.58 level at support below at $15.27 and the psychologically important $10 mark.