Coinbase's Technical Analysis Shows Bullish Momentum and Volatility, 1 month ago

Coinbase Technical Analysis

Coinbase Global, Inc. (NASDAQ: COIN) closed the trading day on December 27, 2023, at $185.24, marking a substantial gain of 7.67%. The stock reached a 52-week high of $186.97, indicating a sharp investor appetite for the stock, which may signal strong bullish sentiment. Volume on the trading day surpassed the average, with approximately 15.42 million shares traded compared to the average volume of 10.63 million. This suggests higher than usual interest from traders and investors.

The Relative Strength Index (RSI) of 79 is in the overbought territory, which could indicate that the stock might be due for a pullback or consolidation in the near term as traders who have gained might take profits. The 50-Day Moving Average is significantly below the last close at $111.50, while the 200-Day Moving Average stands at $81.82, which points to a strong upward trend in the past six months.

The Moving Average Convergence Divergence (MACD), currently at 18.15, also signals strong momentum and a bullish phase in the market for COIN. The Average True Range (ATR) is 4.82, which suggests volatility is still present, and investors should be aware of potential price swings.

However, the stock is now trading without any established resistance level due to reaching a new 52-week high, while the support is identified near the $161.86 price level. Stop-loss can be considered at around $178.90 based on the ATR and recent volatility.

Fundamental Analysis

Coinbase's market capitalization stands at approximately $44.32 billion, indicating a substantial size within the cryptocurrency exchange space. However, investors must consider the negative earnings per share (EPS) at -$3.20, which demonstrates that the company has struggled to generate profits and is reporting net losses.

Coinbase The price-to-earnings ratio (PE) is currently negative at -57.89, reflecting the company's lack of profitability; however, PE ratios can be less informative for growth stocks and those in sectors with high volatility such as cryptocurrency. The earnings announcement scheduled for February 19, 2024, will provide more insights into the company's financial performance.

The analysts' projections show a wide range from a target low of $30 to a high of $600, with a consensus target of $181.73 and a median target of $125. The more optimistic targets may reflect a belief in the company's capacity to capitalize on the crypto market's growth, while the lower targets may show concern for the volatility and regulatory challenges in the industry. The analyst consensus categorizes COIN as a "Buy," with 24 'Buy' ratings, 8 'Hold', and 2 'Sell'.

Recent News Impact

Coinbase has been in the spotlight with recent news highlighting a broad market rally for cryptocurrency-related stocks. News that MicroStrategy has increased its Bitcoin holdings and the reported rally in Bitcoin prices have had a positive spillover effect on Coinbase, suggesting a correlation between the performance of digital currencies and the company's stock. Furthermore, with sentiment high that the positive momentum may continue as the calendar year turns, investor optimism is palpable. COIN stock also seems to be gaining interest from Gen Z, potentially boosting its future market share.

Stock Performance Predictions

For the next trading day and the coming week, COIN's stock performance is likely to continue experiencing volatility associated with the broader cryptocurrency market. The technical indicators point to overbought conditions, suggesting the possibility of a pullback or consolidation. However, if the broader market sentiment remains positive, COIN could potentially maintain its upward momentum, although this may be tempered by profit-taking from recent highs.

Overall Evaluation

Given the recent uptick in price, increased volume, and positive news narratives surrounding cryptocurrency, COIN's stock currently signals a cautious 'Hold.' While the technical indicators are indeed bullish, the high RSI and overextended price above moving averages call for careful attention in the near term. Investors should consider the volatility associated with the cryptocurrency market and the current lack of profitability in Coinbase's fundamentals. Therefore, it would be prudent for investors to wait for a possible retracement for a more attractive entry point or confirmation of continued upside momentum before increasing their positions.

Check full Coinbase forecast and analysis here.