Shiba Inu Follows Dogecoin Into Consolidation: Is Crypton Ready To Rise Higher? – SHIBA INU (SHIB/USD)

by Arthur · November 2, 2022

Shiba Inu SHIB/USD surged over 10% higher at one point during Monday’s 24-hour trading session, in line with Dogecoin DOGE/USDwhich reached 11.72% above Sunday’s 24-hour closing price.

The two Shiba Inu-based cryptocurrencies have mostly traded in unison since October 25, when Dogecoin started to surge higher on news Tesla CEO Elon Musk had told bankers that he planned to close the acquisition of now-private social media company Twitter.

Between that date and Friday, Dogecoin shot up 143% to hit a high of 15 cents, and Shiba Inu surged over 52% to reach $0.00001518. The cryptos have since entered consolidation phases, forming double inside bar patterns.

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 candles must be completely within the range of the mother bar, and each of them is called an “inside bar”.

A double or triple inner rod can be stronger than a single inner rod. After the break of an inside bar pattern, traders want to look for high volume to confirm that the pattern was recognized.

Bullish traders will look for inside bar patterns on stocks or cryptos that are in an uptrend. Some traders may take a position below the inside bar before the break, while other aggressive traders will take a position after the break in the pattern.

For bearish traders, finding an inside bar pattern on a stock or crypto that is in a downtrend will be key. Like bullish traders, bears have two options for where to position themselves to play the pattern breakout. For bearish traders, the pattern becomes invalid if the stock rises above the highest area of the mother candle.

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The Shiba Inu Chart: Although the Shiba Inu dipped slightly below Friday’s low, the double inside was still recognizable. The consolidation phase takes place just below the 200-day simple moving average (SMA), which is to be expected because the 200-day is a difficult level to regain as support on the first try.

The upper weeks on Sunday’s and Monday’s candlesticks indicate that there are sellers above the 200-day SMA, which bodes well for the bears in the short term. Bullish traders will want to see the crypto hold above the eight-day exponential moving average if the Shiba Inu continues to consolidate over the next few days or a breakdown from Saturday’s mother bar becomes likely.

For now, the consolidation appears healthy, and the sideways trade has helped lower Shiba Inu’s relative strength index (RSI) from 73% to around 62%. When a stock or crypto’s RSI approaches or reaches the 70% mark, it is overbought, which can be a sell signal for technical traders.