Now that election uncertainty is over, the stock market broke out of its sideways trading range and continued higher. Potential policy implementations benefit some asset classes, such as cryptocurrencies, which could operate in a more relaxed regulatory environment.
Coinbase Global Inc. (COIN), a crypto-related stock, made it to the top of the Top Up Large Cap stocks in the StockCharts Technical Rank (SCTR) Reports on Wednesday, the day after the US elections.
The weekly chart of Coinbase stock shows a series of lower highs and lower lows from March 2024. COIN has broken above the upper channel line, but it’s just the beginning. More momentum needs to be behind Coinbase’s stock price to see follow-through in this movement.
The daily chart (see below) shows that the uptrend has started. Coinbase’s stock price gapped up and closed near its daily high on strong volume.
COIN is trading above its 21-day exponential moving average (EMA), its SCTR score crossed over 76, and its relative strength index (RSI) is getting close to the 70 level.
When To Buy COIN
I would look at the weekly chart to identify the entry point. Since COIN has broken out of its downward channel, an ideal scenario would be if the stock price pulled back a bit and reversed, at which point I would look for an entry point at around $250. The RSI should also be greater than 70. The first resistance level to watch for would be around $265, a previous high. If COIN pushes through that level, the next level would be $280. It could go even higher if the momentum is behind it. COIN’s all-time high is $429.54.
If owning shares of Coinbase is a stretch at current price levels and you have signed up for the OptionsPlay Add-on, consider trading options on the stock. Below the chart, under Tools & Resources, click on Options, then the OptionsPlay button.
By default, three strategies will be displayed for a bullish scenario. In the screenshot above, the Jan 17 250/340 call vertical has a relatively decent reward for a max risk of $2,600. Click the expand icon at the top right to see more details.
The stock trend doesn’t meet this trade’s requirements. You could modify the legs to see if another strike price or expiration will meet the trend requirement. Another option is to close this window and try out a bearish or high implied volatility environment to see if you get a more optimal strategy.
Once you’ve found a strategy you’re comfortable trading, click the Trade button and copy the trade to your trading platform if you have an options-enabled trading account.
The Bottom Line
Coinbase stock has the potential to rise higher, but a one-day jump in price shouldn’t be your entry criteria. You must still analyze the chart and decide on an entry and exit point that works for your risk tolerance level. Add COIN to your ChartLists and, if possible, set an alert for an entry point. Once you have a position open, follow smart risk management strategies and be prepared to exit a position once it has crossed your exit threshold. You never lose money when taking profits early.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.