Hut 8 Mining Stock Pulls Back With Bitcoin, Ethereum But Will These Bullish Patterns Play Out?

Hut 8 Mining Corp. HUT declined as far as 7.5% in pre-market trading Wednesday morning in sympathy with Bitcoin BTC/USD and Ethereum BTC/USD, which fell 1.52% and 1.57, respectively, between the hours of 7 a.m. and 9:30 a.m. EST.

By Wednesday afternoon, Hut 8 had erased most of its losses, following Bitcoin which was trading mostly flat. Cryptocurrency mining stocks are affected by both the cryptocurrency markets and the general markets, which can make the stocks volatile as the two markets don’t always move in unison.

See Also: How to Buy Bitcoin

The Hut 8 Chart: Hut 8 printed a new Nov. 9 all-time high of $16.57 and has since settled into a period of consolidation. In its consolidation, Hut 8 may be forming into both a falling wedge pattern on the daily chart and a bull flag pattern on the weekly chart.

On the daily chart, the falling wedge pattern began on Nov. 2 and the stock has reacted to both the upper and lower descending trendlines of the formation on multiple occasions. If the pattern is recognized, Hut 8 may break up bullishly from the pattern before meeting the apex on Nov. 30.

Zooming out to the weekly chart, Hut 8 may be creating a bull flag pattern with the pole of the pattern created between Sept. 27 and Nov. 8 and the flag beginning to form on Monday. The measured move, calculated by adding the length of the pole to the bottom of the flag is a whopping 113%, which indicates Hut 8 could more than double in the future although Bitcoin would likely need to make a series of new all-time highs for that to play out.

The consolidation on Hut 8 was needed because from Nov. 1 to Nov. 9, Hut 8’s relative strength index (RSI) has been hovering near or above the 70% level. When a stock’s RSI nears or exceeds the level it becomes overbought, which can be a sell signal for technical traders.

Hut 8 is trading below the eight-day exponential moving average (EMA) and in line with the 21-day EMA, with the eight-day EMA trending above the 21-day, which indicates indecision. The stock is trading above the 50-day simple moving average, which indicates overall sentiment remains bullish.

• Bulls want to see Hut 8 eventually break up from both bullish patterns on big bullish volume, which will indicate one or both of the patterns was recognized. Hut 8 has resistance above at $14.18, $15.45 and at the previous all-time high.
• Bears want to see Hut 8 continue to trade down in the patterns and then for big bearish volume to come in and break the stock either down through the bottom trendline of the falling wedge or for Hut 8 to fall below the eight-day EMA on the weekly chart. Hut 8 has support below at $13, $11.97 and $10.90.

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Photo: Courtesy Hut 8 Mining