Crypto exchange Coinbase Global (COIN) has benefited from the resurgence in Bitcoin.
By the time COIN peaked on March 25 at $283.48, it had gained around 290% since October. That’s when Bitcoin’s latest big run began.
But since hitting that peak, shares in COIN have drifted. Even an earnings beat earlier this month failed to regain lost momentum.
So today, I want to look at where COIN is heading next…
Why COIN Doubled in a Little Over a Month
As the chart below shows, COIN started rallying in early November.
Coinbase Global (COIN)
Source: eSignal
That rally coincided with the Relative Strength Index (RSI) breaking through resistance (green line) and into the upper half of its range.
The 10-day moving average (MA, red line) also crossed above the 50-day MA (blue line), with both MAs trending higher.
The blue moving average convergence/divergence (MACD) line also crossed above the orange signal line, with both tracking higher.
But COIN retraced late last year. We saw a common reversal pattern.
The RSI made lower highs (left lower orange line) while COIN made higher highs (left upper orange line).
RSI’s declining momentum pulled COIN lower.
COIN’s rally then resumed, with similar patterns to its November rally.
This time, both the MAs and MACD made bigger moves. That showed the increased strength of this rally.
And that’s why COIN doubled in a little over a month.
Then COIN peaked. The stock price and RSI diverged again, as shown by the right orange lines.
Take another look:
Coinbase Global (COIN)
Source: eSignal
From there, COIN has slid. The RSI has fallen back through support (green line) and into its lower band.
Adding further weight to the down move, the 10-day MA crossed beneath the 50-day MA. And the MACD broke below its zero (0.00) line.
COIN initially rallied off the back of its Q1 earnings beat. But it again reversed and has been tracking lower.
So with the signals still bearish, what am I looking for around here?
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COIN’s Next Move
Unless the RSI can break back into its upper range, COIN’s drift lower is likely to continue. The longer the RSI remains in its lower band, the longer this pullback will last.
I’ll also be keeping a close watch on the MACD.
COIN won’t rally again unless the MACD line breaks back above the zero line and drags the signal line with it.
If the MACD and signal lines remain stuck below the zero line, the current weakness is likely to continue.
Beyond that, we need to monitor our two MAs…
As I mentioned, the 10-day MA has recently crossed below the 50-day MA.
If the 10-day MA continues to pull the 50-day MA down with it, COIN will have further to fall.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict