Trading Strategies For Coinbase Stock Heading Into Q3 Earnings

Coinbase Global, Inc COIN is set to print its fiscal third-quarter financial results after the market closes on Thursday, and the stock was edging over 8% higher heading into the report.

When the cryptocurrency trading platform printed a second-quarter earnings beat on Aug. 3, the stock was volatile the next day and closed lower.

For that quarter, Coinbase reported a loss of 42 cents per share, which beat a Street consensus estimate of a loss of 78 cents per share. The company beat on the top line, reporting revenue of $707.9 million, which beat a Street consensus estimate of $643.36 million.

For the third quarter, analysts estimate Coinbase will print earnings of 54 cents per share on revenues of $650.78 million. Read more here...

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On Wednesday, Citigroup analyst Peter Christiansen maintained a Neutral rating on Coinbase and lowered a price target from $105 to $90. The price target suggests about 16% upside for the stock.

For the third quarter, crypto traders and investors will be watching to see how much of Coinbase's revenue was brought in through Bitcoin and Ethereum trading specifically. Although the two apex cryptos have been experiencing a bull run during the fourth quarter, momentum declined during most of the summer quarter.

From a technical analysis perspective, Coinbase’s stock looks mildly bullish, not trading in a clear uptrend or downtrend but holding above the 200-day simple moving average.

Bullish traders and investors looking to play the possible upside in Coinbase stock but with a diversified approach may choose to take a position in the AXS 2X Innovation ETF TARK. TARK is an actively managed double-leveraged ETF aiming to return 200% of the daily performance of Cathie Wood-led ARK Innovation ETF ARKK. Coinbase is the top holding within ARKK, with a 9.09% weighting, followed by Tesla at 8.84%.

The Coinbase Chart: Coinbase has been trading mostly sideways between about $70 and $83 since Aug. 11, forming short uptrends and downtrends within that price range. On Oct. 27, Coinbase negated a small uptrend with a lower low but bounced up from the 200-day simple moving average (SMA), which suggests the stock is trading in a bull cycle.

On Thursday, Coinbase gapped up to open the trading session and is trading well above the 50-day SMA, which is bullish. The stock was working to form a doji hammer candlestick, however, which suggests the local top may have occurred and a retracement is on the horizon.
Bullish traders want to see big bullish volume come in and drive Coinbase up above the Oct. 24 high of $89.40, which will cause a higher high to form, which is the first step of forming a new uptrend. If that happens, bullish traders will eventually want to see a pullback to allow Coinbase to confirm the trend with a higher low.
Bearish traders want to see Coinbase suffer a negative reaction to its earnings and then for big bearish volume to come in and drop the stock under the 200-day SMA. If that happens, downside pressure is likely to accelerate.
Coinbase has resistance above at $92.15 and at $102.59 and support below at $83.32 and at $69.82.