Coinbase Global, Inc (NASDAQ:COIN) was trading slightly lower on Tuesday in sympathy with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which were consolidating sideways after a multi-day run brought the apex cryptocurrencies up about 32% and 43%, respectively, off their late-January lows.
On CNBC, Joseph Terranova of Virtus Investment Partners said he planned on buying Coinbase shares with a stop at the pivot point at $187.15. A pivot point is an area of support and resistance traders use on different timeframes to identify entries, exits and areas to place a stop loss.
Coinbase is expected to launch its highly anticipated NFT marketplace imminently, according to an email sent out Monday to people who had signed up for the waitlist. The email also highlighted a partnership with Mastercard (NYSE:MA), which people will be able to use when purchasing NFTs on the Coinbase marketplace.
Coinbase has signaled a bullish reversal this week but many bullish chart set-ups in individual stocks have been stomped down by the general markets lately, with the SPDR S&P 500 (NYSE:SPY) trading mostly sideways since Feb. 3. The horizontal pattern doesn’t provide the bulls or the bears much confidence in the future direction.
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The Coinbase Chart: On Monday, Coinbase broke up bullishly from a long-term falling channel that had been holding the stock down since it reached a Nov. 9 high of $369.90. On Tuesday, Coinbase attempted to move higher bit slammed into the 21-day exponential moving average (EMA) and rejected the level.
Coinbase opened lower and fell down to test the upper descending trendline of the falling channel as support. A back test of a previous area of resistance that has become support can be a potential entry point for bullish traders to take a position, with an exit strategy to sell the security if it falls below the area.
The upper trendline of the pattern also aligns with the eight-day EMAs, which provides additional support at the level. Next, Coinbase will need to regain the 21-day EMA as support and trade above it for a period of time, which will eventually cause the eight-day EMA to cross back above the 21-day.
Tuesday's price action, which by mid-day was completely within Monday's price range has also settled Coinbase into an inside bar pattern on the daily chart. The inside bar is bullish in this case because the stock was trading higher before creating the pattern.
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- Bulls want big bullish volume to come in and push Coinbase up to make a higher high above Monday’s highest price of $210.96, which will confirm the uptrend is still intact and cause the stock to regain the 21-day EMA as support. Coinbase has resistance above at $213.23 and $225.28.
- Bears want Coinbase to continue to reject the 21-day EMA and then for big bearish volume to come in and knock the stock down below the $177 level, which would end the uptrend. There is support below the upper descending trendline of the channel at $191.48 and $177.45.
