Coinbase Stock Runs Into Earnings As Bitcoin, Ethereum Soar: What's Next?

Coinbase Global Inc COIN rallied Monday after breaking up from a four-day consolidation pattern under a resistance area at $345.99.

On Nov. 1, Benzinga called for continuation after the stock printed a long-legged doji candlestick and an inside bar pattern, one from which Coinbase broke bullishly later that day.

The stock may be partially propelled higher by the cryptocurrency market, which saw many cryptos rallying: intraday, Bitcoin BTC/USD was nearing its all-time high of $66,999 and Ethereum ETH/USD reached a new all-time high of $4,795.93.

Retail traders should note the cryptocurrency exchange platform is set to print its third-quarter earnings after the closing bell on Tuesday. Holding stock or options over earnings can be a gamble because there can be a bullish reaction to an earnings miss and a bearish reaction to a beat.

When Coinbase reported a massive second-quarter bat on Aug. 10, the stock reacted bullishly and rose up to the $294 level — but lost over 14% of its value over the six subsequent trading days.

See Also: 4 Stocks Insiders Are Selling

The Coinbase Chart: On Monday, Coinbase gapped up over the heavy resistance zone near $346 but ran into a group of sellers who dropped the stock down to close the lower gap. At about 10 a.m. EST, it appears algorithms may have turned on and the steady buying pressure allowed Coinbase to begin walking up the eight-day exponential moving average (EMA) on the 15-minute chart to hit a midday high of $363.17.

If Coinbase closes the trading session near its high-of-day price, it will print a bullish kicker candlestick pattern, which may indicate higher prices will come on Tuesday. It should be noted that when a stock runs up into its earnings print, it becomes more likely the event will cause a sell-the-news reaction.

Coinbase’s relative strength index (RSI) has been registering in between about 66% and 78% since Oct. 15. When a stock’s RSI reaches or exceeds the 70% level it becomes overbought, which can be a sell signal for technical traders. A stock’s RSI can remain extended for a long period of time. 

The stock has been trading in a solid uptrend since Coinbase broke up from a descending channel on Oct. 15, making a consistent series of higher highs and higher lows. Coinbase’s most recent higher low was printed on Nov. 3 at the $328 mark, and as long as the stock doesn’t retrace below the level, the uptrend will remain intact.

Coinbase is trading above the eight-day and 21-day EMAs, with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading well above the 50-day simple moving average, which indicates longer-term sentiment is bullish.

• Bulls want to see sustained big bullish volume push Coinbase higher toward its April 14 all-time high of $429.54. Besides the level, Coinbase doesn’t have much resistance in the form of price history, and price discovery near current levels may be needed.
• Bears want to see a bearish reaction to Coinbase’s earnings and for big bearish volume to drop the stock down through two support levels at $345.99 and $334.83, which would put Coinbase in danger of losing its uptrend. Below the levels, there is further support at $317.37.

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