Bitcoin (CRYPTO:BTC) fell by an average of about 1% on Friday, indicating weakness against the broader market that pushed the S&P 500 slightly higher following Jerome Powell's comments during the Jackson Hole Symposium .
At the peak of cryptocurrency trading, Bitcoin formed an inside double bar on the 24-hour chart. The inside bar pattern indicates a period of consolidation and usually accompanies a continuation of movement in the direction of the current trend.
The inside bar pattern is most effective on longer time frames (4 hour charts or older). The pattern contains at least two candlesticks and consists of an original bar (the first candlestick in the pattern) followed by one or more bars. Subsequent candles must be completely within the range of the original bar, and each candle is referred to as an "inside bar".
Double or triple inner ropes can be stronger than single inner ropes. Once the inner bar pattern is broken, traders will want to monitor more volume to make sure the pattern is caught.
Although the broader market and the cryptocurrency sector often trade simultaneously, a break of the inside double bar pattern over the weekend could indicate that the S&P 500 will fall on Monday. In this case, volatility in the stock market could increase.
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Bitcoin chart: Bitcoin has been trading mostly sideways in a process of consolidation since August 17, when the cryptocurrency occasionally plunged more than 12% and fell below its 200-day simple moving average, sending the cryptocurrency into a potential downside cycle. On Wednesday, the cryptocurrency attempted to rise but failed to regain support from the eight-day exponential moving average, leaving Bitcoin in an interior double-bar pattern on Thursday and Friday.
- The inside bar pattern is slightly bearish as Bitcoin trades lower, however traders and investors can see the cryptocurrency deviating from its original bar at above average volume to indicate future direction.
- If Bitcoin falls on Saturday or Sunday, a rebound is likely to occur as Bitcoin's Relative Strength Index (RSI) has been below 30% since August 16th. When the RSI of a stock or cryptocurrency reaches or falls below this area, it is oversold, which can be a short-term buy signal for bullish traders.
- Bitcoin has resistance above $27,133 and $28,690 and support below $25,772 and $25,288.
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