© Reuters. Coinbase Plunges Despite Bitcoin, Ethereum Holding Strong: What’s Going On?
Benzinga – Coinbase (NASDAQ:) Global Inc (NASDAQ: COIN) was plunging more than 8% on Tuesday, in sympathy with the S&P 500, which was sliding about 2% lower amid recession fears.
The cryptocurrency exchange can be both positively and negatively affected by the general markets and the crypto sector, but despite (CRYPTO: BTC) and (CRYPTO: ETH) holding strong, Coinbase couldn’t find buyers to prop it up.
The S&P 500 created a bull trap between Nov. 30 and Dec. 2, when it temporarily regained support at the 200-day simple moving average.
The move up above the indicator caused some traders and investors to gain hope the bear market may be heading into hibernation, but on Monday and Tuesday, the bears took back control.
Although Coinbase closed down more than 4% on Monday, Tuesday’s plunge caused the stock to break down from an ascending channel pattern. The pattern is bullish for the short term but can be bearish down the road.
For bullish traders, the “trend is your friend” (until it’s not) and the stock is likely to continue upwards. Aggressive traders may decide to buy the stock at the lower trendline and exit the trade at the upper trendline.
- Bearish traders will want to watch for a break down from the lower ascending trendline, on high volume, for an entry. When a stock breaks down from an ascending channel, it’s a powerful reversal signal and indicates a steep downtrend may be in the cards.
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The Coinbase Chart: Coinbase’s break down through the ascending channel pattern also caused the stock to negate the uptrend within the parallel lines, which the stock began trading in on Nov. 22. Although the uptrend has been negated, Coinbase will need to print a lower high on the next bounce to confirm a new downtrend.
- If Coinbase closes the trading day near its low-of-day price, the stock will print a bullish kicker candlestick, which could indicate lower prices will come again on Wednesday. The second most likely scenario is that Coinbase prints an inside bar pattern to consolidate the steep fall.
- If the stock trades lower on Wednesday, bullish traders and investors can watch for Coinbase to print a bullish reversal candlestick, such as a doji or hammer candlestick, at the $40.61 low, which was reached on Nov. 21. If Coinbase were to fall under that level, there is no support below in terms of price history.
- Although Coinbase isn’t likely to reach oversold territory on the daily chart until the stock forms a new all-time low, a test of the $41.60 level on the hourly chart will sink Coinbase into oversold territory, which could provide an area for a bounce.
- Coinbase has resistance above at $44.15 and $50.34 and support below at $40.61 and the psychologically important $40 mark.
Read Next: Coinbase CEO Says Sam Bankman-Fried’s Hedge Fund Used $8B Of Stolen Customer Money
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