Coinbase Global Inc (NASDAQ:COIN) was trading over 4% higher on Monday following Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which closed the 24-hour session 4.67% and 4.88% higher, respectively, on Sunday.
The cryptocurrency leaders continued to trade higher on Monday at publication with Bitcoin rallying more than 9% and Ethereum rising over 10% amid overall market strength. Also helping Coinbase to hold its gains was the SPDR S&P 500 ETF Trust (NYSE:SPY), which was trading up over 1% to fill the overhead gap left behind on Friday when news of the COVID-19 omicron variant was announced.
Coinbase retraced over 18% after reaching a Nov. 9 high of $368.90 to a low of $299.15 where the stock may have put in a bottom. Traders and investors will want to watch closely for signs of a trend change that may be in the works if Coinbase can get follow through on a daily higher high.
The Coinbase Chart: After reaching the new high, Coinbase began a period of consolidation in a pennant pattern on the daily chart and on Nov. 18 broke down bearishly from the pattern on relatively high volume. The high volume on the bearish break indicates the pattern was recognized.
Following the bearish break, Coinbase entered into a downtrend within a falling channel pattern. Within the pattern, Coinbase has made a consistent series of lower highs and lower lows with the most recent lower low created on Friday and the most recent lower high printed on Nov. 24 at the $316.32 mark.
On Monday, Coinbase was attempting to pop up over the most recent lower high, which would be the first indication the stock may begin trading in an uptrend. The move higher also indicates the falling channel was recognized because the initial 9:45 a.m. break up from the pattern was on high volume.
Coinbase has a gap below on the chart between $262.95 and $266.53, which was left behind on Oct. 15. Gaps on charts fill about 90% of the time so it’s likely Coinbase will trade down into the range in the future, although it could be a significant amount of time before that happens.
Coinbase is trading below the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is trading above the 50-day simple moving average, which indicates longer-term sentiment remains bullish.
- Bulls want to see big bullish volume come in and push Coinbase up to close the day above the Nov. 24 high-of-day, while keeping in mind an eventual higher low will be needed to confirm the uptrend. Coinbase has resistance above at $327.43 and $334.83.
- Bears want to see big bearish volume come in and push Coinbase down below Friday’s low-of-day, which would confirm the downtrend is still intact. Below the level, there is support at $303.90 and $294.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.