Bitfarms, Ltd (NASDAQ:BITF) and Hut 8 Mining Corp (NASDAQ:HUT) skyrocketed up 20% and 13.5%, respectively, at one point on Monday, in reaction to Bitcoin (CRYPTO: BTC), which soared almost 6% higher over the weekend when the general markets were closed. The spike was also partly due to Bitfarms printing strong earnings results in the premarket.
The move higher supplied the two crypto miners with continued momentum in their uptrends, which Bitfarms and Hut 8 reversed into on March 15 after each stock printed a bullish double bottom pattern on that date and the trading day prior.
When the stocks reversed into their uptrends, Bitfarms and Hut 8 began to trade in rising channel patterns and on Monday, Bitfarms and Hut 8 both attempted to break up from the upper ascending trendline and failed, which knocked them down off their high-of-day. Bitfarms and Hut 8 look set to trade higher still, although both stocks will need to print a higher low within their uptrends, which could give bullish traders who aren’t already in a position a solid entry point.
It should be noted, however, that events affecting the general markets, negative or positive reactions to earnings prints and news headlines can quickly invalidate patterns and breakouts. As the saying goes, "the trend is your friend until it isn't" and any trader in a position should have a clear stop set in place and manage their risk versus reward.
In The News: On Monday, Bitfarms showed strong growth when it printed its fourth-quarter earnings. The company reported revenue growth of 33% over the previous quarter and growth of a whopping 426% year-over-year to $60 million. On March 17, Hut 8 reported fourth-quarter revenue growth of 346% from the same quarter the year prior.
Following Hut 8’s results, Canaccord Genuity maintained a Buy rating on the stock, but lowered its price target to $12. If Hut 8 was able to reach the $12 level it would represent a massive 94% increase from the current share price.
See Also: Bitcoin Nears $47K Level, Pulls Up Ethereum And Dogecoin: What's Driving The Crypto Rally?
The Bitfarms Chart: When Bitfarms rejected from the top ascending trendline of the rising channel, the stock ran into a group of sellers who caused the daily candlestick to form a large upper wick. If the stock closes the trading day on Monday below the $4.25 level, it will print a shooting start candlestick on the daily chart, which could indicate lower prices will come on Tuesday.
- If lower prices come on Tuesday, traders can watch for Bitfarms to form a reversal signal at the bottom ascending trendline of the channel and bounce back up toward the median line.
- If Bitfarms were to break down through the bottom of the channel on higher-than-average bearish volume, it could indicate a return to the 52-week lows near the $2.75 mark is in the cards.
- Bitfarms was trading on massive bullish volume, which indicates there is a high level of trader and investor interest in the stock. By early afternoon on Monday, about 7.9 million shares of Bitfarms had exchanged hands, compared to the 10-day average of 4.7 million.
- Bitfarms has resistance above at $4.59 and $5.49 and support below at $3.83 and $3.16.
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The Hut 8 Chart: Like Bitfarms, Hut 8 looked to be printing a shooting star candlestick on Monday, after rejecting the top ascending trendline of the channel, which indicates the next high low of the uptrend may come on Tuesday.
- Hut 8 opened higher, but big bearish volume came in and knocked it down to a new low-of-day, which also indicates lower prices may come on Tuesday. By early afternoon, Hut 8’s volume was measuring in at about 9.72 million, compared to the 10-day average of 8.55 million.
- Hut 8 may form a reversal candlestick, such as a doji or hammer candlestick, above the 50-day simple moving average, which is trending slightly above the lower ascending trendline of the channel pattern.
- Hut 8 has resistance above at $6.67 and $7.70 and support below at $5.75 and $4.53.
