Bitcoin BTC/USD was trading mostly flat during Sunday’s 24-hour session in continued consolidation after surging 15% over the course of Wednesday and Thursday’s sessions.
The consolidation is helping to keep Bitcoin’s relative strength index (RSI) from soaring up into overbought territory at the 70% mark.
Bitcoin has gained 19% since the beginning of July, which caused the crypto’s RSI to correct from 29% on July 1 to the 60% level as of press time. The momentum coming back into Bitcoin has caused the fear and green index measurement to improve slightly from “extreme fear” in June, measuring in at 11, to “fear” in July, measuring in at 39.
Bitcoin Fear and Greed Index is 39. Neutral
Current price: $23,799 pic.twitter.com/23MtonSeom
— Bitcoin Fear and Greed Index (@BitcoinFear) July 31, 2022
The crypto’s consolidation phase is taking place in an inside bar pattern on the daily chart. An inside bar 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.
- 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 Bitcoin Chart: Bitcoin’s inside bar pattern leans bullish because the crypto is trading in a fairly consistent uptrend. Sunday’s candlestick is printing near the bottom of Saturday’s mother bar, however, which may give bullish traders pause.
- If Bitcoin falls below Saturday’s trading range on lower-than-average volume, the pattern will be invalidated. If a break lower comes on high volume, traders can watch for Bitcoin to print a higher low above $20,715, which could indicate the uptrend is intact.
- If Bitcoin breaks up bullishly from the inside bar pattern, Saturday’s low-of-day may serve as the next higher low within the uptrend.
- There’s a possibility Bitcoin could be printing a bull flag pattern, with the pole formed between Wednesday and Thursday and the flag formed over the 24-hour trading sessions that have followed. Conservative traders may decide to hold off on betting the bull flag pattern will play out until Bitcoin breaks up from the pattern because of the upper wicks on Friday and Saturday’s daily candlesticks.
- If Bitcoin drops under the eight-day exponential moving average, it’s likely the bull flag has been invalidated.
- Bitcoin has resistance above at $25,772 and $29,321 and support below at $22,729 and $19,915.
See Also: If You Had $10,000 Right Now, Would You Put It On Bitcoin, Ethereum Or Shiba Inu (SHIB)?
Image and article originally from www.benzinga.com. Read the original article here.