Coinbase Global, Inc (NASDAQ:COIN) and Robinhood Markets, Inc (NASDAQ:HOOD) have both formed daily chart patterns that could provide clues to their future direction.
On Tuesday, Coinbase and Robinhood were reacting to possible reversal candlesticks that are often found at the bottom of a downtrend.
Both stocks have plummeted over different time periods, with Coinbase trading down about 33% from its Nov. 9 all-time high of $368.90 and Robinhood losing about 80% of its value since reaching an all-time high of $85 on Aug. 4 to reach a Dec. 17 all-time low of $17.08.
On Monday, Coinbase shares were trading slightly higher as they attempted to reverse a downtrend, but it should be noted that events affecting the direction of the general markets and news headlines about a stock can quickly invalidate patterns.
As the saying goes, "the trend is your friend until it isn't," and any trader in a position should have a clear stop set in place and manage their risk versus reward.
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In The News: As the holidays approach, more people have been choosing to give the gift of crypto to their friends and family, which could have a positive effect on Coinbase and Robinhood’s fourth-quarter earnings because both apps now offer the service.
While Coinbase users have had the option to gift crypto for a while, Robinhood users in Hawaii and Nevada will have the ability to gift crypto beginning Wednesday, which may entice last-minute shoppers.
Coinbase and Robinhood stock are also affected both negatively and positively by the movement of the cryptocurrency market and on Tuesday, Bitcoin was breaking up bullishly from a falling channel and triple bottom pattern. More information will be needed for technical traders to feel confident the two stocks have bottomed, however, but there are positive signs for both stocks that may confirm that at least a bounce is on the way.
The Coinbase Chart: Coinbase broke bearishly from a triangle pattern on Nov. 18 and has since traded in a consistent downtrend, making a series of lower highs and lower lows.
- On Monday, Coinbase printed a hammer candlestick on the daily chart, which when found at the bottom of a trend can indicate a reversal may be in the works.
- On Tuesday, Coinbase gapped up but ran into a group of sellers who allowed the stock to close the gap, which should give bullish investors more confidence going forward.
- For added confidence, traders may want to wait and see if Coinbase can regain support of the eight-day exponential moving average before taking a position and then use the indicator as a guide.
- Coinbase has resistance above at $248.49 and $263.19 and support below at $225.28 and $213.23.
The Robinhood Chart: On Dec. 17, Robinhood hit an all-time low and bounced up from the level, which caused the stock to print a hammer candlestick.
- On Monday and Tuesday, Robinhood printed a double inside bar on the daily chart in consolidation, which leans bearish because the stock was trading lower before forming the pattern.
- Both bulls and bears can watch for a break of the inside bar on either Tuesday afternoon or on Wednesday to gauge future direction.
- Robinhood has resistance above at $19.89 and $23.74 and support below at $17.08.
The Coinbase platform. Courtesy photo.
