On Sunday evening, Benzinga asked its Benzinga Pro community which tickers they’d like analyzed. From the replies, Benzinga selected three tickers for technical analysis.
Pro user Mason1010 wanted to see a technical analysis on Coinbase Global, Inc COIN and commented that it was setting up nicely. Mason1010 also noted options move nicely on the stock, “if you are on the right side of course.”
Institutions seem to like trading Coinbase options and on Friday hammered dozens of call contracts. One trader purchased 172 Coinbase calls at $4.80 per piece with a Dec. 17 expiry and a whopping $450 strike price. The order cost the trader a total of $82,560. Another trader spent a massive $552,500 for 50 in the money calls at $110.50 per piece. The trader chose a strike price of $220 and an expiry of Jan. 21, 2022.
Coinbase has two upcoming events that may be catching the eyes of both institutional and retail investors:
- The company will soon be opening its highly-anticipated NFT marketplace for which over 2 million people are already waitlisted.
- Coinbase is expected to print its third-quarter earnings on Nov. 11 after the closing bell. When Coinbase printed its second-quarter earnings in August it blew estimates out of the water.
The Coinbase Chart: Coinbase has been trading in a four-day period of sideways consolidation after breaking up bullishly from a second bull flag pattern on Oct. 25. On Friday, the stock printed a long-legged doji candlestick on the daily chart.
The long-legged doji candle is most significant when it appears in a strong uptrend or downtrend and Coinbase is currently trading in a strong uptrend. The candle indicates supply and demand is nearing an equilibrium. Bullish traders will want to watch for a break over the most recent higher high at the $328.48 mark for confirmation the uptrend will continue.
Coinbase’s relative strength index (RSI) has been hovering near or above the 70% area for the past 11 trading days. When a stock’s RSI nears or exceeds the level it signals overbought conditions, which can be a sell signal for technical traders. It should be noted, however, that the indicator can stay extended for long periods of time, especially if a volume climax doesn’t occur.
There is a gap below on the Coinbase chart between $262.95 and $266.53. Gaps on charts fill 90% of the time so it's likely Coinbase will retrace to the area in the future, although it could be quite some time before that happens considering the stock is trading almost 20% above the gap.
Coinbase is trading above the eight-day and 21-day exponential moving averages (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 long-term sentiment is bullish.
- Bulls want to see big bullish volume break Coinbase up to make another higher high. There is resistance above near the $334 and $345 areas, as well as psychological resistance at $350.
- Bears want to see big bearish volume come in and drop Coinbase down below the most previous higher low of $306.50 to negate the uptrend. The stock has support below at $317.37, $303.90 and $294.
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