Coinbase Global, Inc (NASDAQ:COIN) gapped up over 2% after rising over 4% intraday on Tuesday but immediately sold off, falling toward Tuesday’s low-of-day within the first 30 minutes of Wednesday's market open.
The cryptocurrency trading platform, which is affected by both the general markets and the crypto sector, has been beaten down heavily, plunging about 67% from its April 14, 2021 all-time high of $429.54 to Monday’s all-time low of $140.53.
On Monday, Oppenheimer maintained its Outperform rating on Coinbase but lowered the price target to $314. Oppenheimer’s target price comes in far above Mizuho, which on April 12 maintained its Neutral rating on the stock and lowered its price target to $150.
Coinbase closed the trading session on Tuesday slightly above the lowest price target at $151.27, and looked set to rise further amid an ongoing rally in Bitcoin (CRYPTO: BTC) and the S&P 500 but on Wednesday, Coinbase overreacted to a pullback in the general markets.
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The Coinbase Chart: Coinbase has been trading in a downtrend since March 30, making a consistent series of lower highs and lower lows, with the most recent lower high printed on April 12 at the $162.44 level and the most recent lower low formed on Monday at the low-of-day.
On Wednesday, Coinbase may have printed the next lower high within the pattern but additional daily candles will need to print for confirmation.
When Coinbase retraced on Wednesday morning, the stock didn’t fall below Tuesday’s lowest price, which is bullish. If Coinbase closes the trading above the $149 level, it will print a hammer candlestick on the daily chart, which could indicate higher prices will come on Thursday. If Coinbase can rise up to the $163 level, the downtrend will be negated.
If the stock closes the trading day near its low-of-day price, Coinbase will print a bearish engulfing candlestick, which could indicate lower prices will come on Thursday and the downtrend is likely to continue.
Coinbase’s relative strength index (RSI) has been hovering between about 34% and 38% since April 8, which indicates a larger bounce is likely on the horizon. When a stock’s RSI nears or falls to the 30% level it becomes oversold, which can be a buy signal for technical traders.
Bulls want to see big bullish volume come in and push Coinbase back up to the $154 level, which will cause the stock to regain the eight-day exponential moving average as support, which may give the stock the power needed to print a higher high and negate the downtrend. Coinbase has resistance above at $150.12 and $162.20.
Bears want to see big bearish volume come in and push Coinbase down below Tuesday’s low-of-day, and for bearish momentum to cause the stock to fall to a new all-time low and continue in its downtrend. Below the $140.53 all-time low, there is no further resistance in the form of price history.
See Also: Coinbase And This Cold Wallet Stock Look 'Quite Discounted' Ahead Of Potential Crypto Rally
