Coinbase Global, Inc. operates as a secure hosted bitcoin wallet to purchase and use bitcoin. It provides merchant tools that enable companies to accept payments in bitcoin by incorporating a single button.

Take a look at the 1-year chart of Coinbase (NASDAQ: COIN) below with the added notations…

Chart of COIN provided by TradingView

COIN had formed an important level of support at around $215 (blue), until January when the stock broke lower. That level then became resistance for COIN. In addition, the stock was recently climbing a trendline of support (green). The stock had to break one of those lines, eventually, and yesterday brought a trendline break.

The Tale of the Tape: COIN broke a key support area of $215 last month, and now it has broken trendline support as well. A short position could be made, with a stop placed above the level of entry. A break back above $215 could be an opportunity to get long the stock.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT 

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