Coinbase Global, Inc (NASDAQ:COIN) closed down 5% on Monday amid a bearish day for both the cryptocurrency and general stock markets, with both Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) falling about 5% lower during the 24-hour session and the SPDR S&P 500 declining 0.95% during the last 45 minutes of trading.
Cathie Wood-led investment management firm Ark Invest used the opportunity to buy the dip in Coinbase’s stock and purchased 79,418 shares, which is estimated to be worth $25 million. Wood is an outspoken proponent of Bitcoin and has said she expects the crypto to soar to the $500,000 level within the next five years, which would be a massive boost for Coinbase –- a cryptocurrency exchange platform.
See Also: How to Buy Coinbase Stock Right Now
The Coinbase Chart: On Nov. 18, Coinbase broke bearishly down from a pennant formation the stock had settled into after reaching a Nov. 9 high of $368.90. On Nov. 19, Coinbase consolidated the move lower by printing a bearish inside bar on the daily chart and on Monday the stock broke down bearishly from the pattern.
The bearish break further confirmed Coinbase is trading in a downtrend, with the most recent lower high printed on Nov. 17 at the $348.49 mark and the most recent lower low created on Monday at $310.67. Both bullish and bearish traders can watch for the next lower high to be printed over the coming days.
Coinbase has a gap below between the $262.95 and $266.53 levels that was left behind on Oct. 15 when the stock began its 38.92% run into third-quarter earnings. Gaps on charts fill about 90% of the time so it’s likely Coinbase will trade down into the range in the future, although it could be some time before that happens as the stock is currently trading about 15% above the gap.
The stock is trading below the eight-day and 21-day exponential moving averages (EMAs) but the eight-day EMA is trending above the 21-day, which indicates indecision. If Coinbase doesn’t recapture both EMAs soon the eight-day will cross below the 21-day, which would be bearish. Coinbase is trading above the 50-day simple moving average, however, which indicates longer-term sentiment remains bullish.
- Bulls want to see Monday’s move lower consolidated on low volume and then for big bullish volume to come in and push Coinbase back up above a support and resistance level at $317.37. Above the level there is further resistance at $334.83 and $345.99.
- Bears want to see sustained big bearish volume drop Coinbase down below a support level at $303.90. If Coinbase can’t maintain the level as support, has room to drop down to test psychological support at $300 and below the area there is further support at $294.