Trading Strategies For Coinbase Stock Before And After Q4 Earnings

Coinbase Global, Inc COIN is set to print its fiscal fourth-quarter financial results after the market closes on Tuesday, and the stock was sliding 3% lower heading into the report.

When the cryptocurrency trading platform printed a third-quarter miss on Nov. 3, the stock rallied over 5% the following day but subsequently continued in its downtrend, which brought Coinbase to a Jan. 6 low of $31.55.

For the fourth quarter, analysts estimate Coinbase will print an earnings loss of $2.39 per share on revenues of $586.23 million.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

On Friday, Compass Point analyst Chris Allen upgraded Coinbase from Neutral to Buy and announced a price target of $100. The day prior, DA Davidson analyst Christopher Brendler downgraded the stock from Buy to Neutral and announced a $60 price target. Read more here

An ongoing bearish crypto market during the fourth quarter likely affected Coinbase: bearish markets often lead to lower trading volume and fewer transactions.

For the fourth quarter, crypto traders and investors will be watching to see how much of Coinbase's revenue was brought in through Bitcoin and Ethereum trading, which may suggest whether interest in the crypto sector is increasing or waning. Bitcoin has surged about 50% this year, which suggests traders and investors could have been accumulating the crypto during the fourth quarter.

From a technical analysis perspective, Coinbase’s stock looks neutral, having settled into a downtrend but currently holding above the 200-day simple moving average (SMA).

It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

The Coinbase Chart: Coinbase was setting into an inside bar pattern on Tuesday, with all the price action taking place within Friday’s trading range. The pattern leans neutral in this case and traders can watch for the stock to break up or down from the mother bar after-hours when the stock reacts to the earnings print to gauge future direction.

• Coinbase is trading above the 200-day SMA, which is bullish. Bullish traders will want to see the stock hold above that level on Wednesday and for the stock to possibly form a higher high confirm a new uptrend and negate its current downtrend. Coinbase’s most recent lower high within that pattern was formed on Feb. 16 at $73.30 and the most recent confirmed lower low was printed at the $53.66 mark on Feb. 13.
• If Coinbase trades higher on Wednesday, Friday’s low-of-day will serve as a higher low. If the stock is able to remain above the 200-day SMA for a longer period, the 50-day SMA will eventually cross above the 200-day, which would cause a golden cross to form and give bullish traders more confidence going forward.
• If the stock drops under the 200-day, a longer-term downtrend could be in the cards.
• Coinbase has resistance above at $83.32 and $112.14 and support below at $60.99 and $50.34.

Read Next: Notorious Hackers Briefly Compromise Coinbase Employee Information

Image courtesy of Coinbase