The stock rose 44% in early trade, before pulling back, gaining about 10% to near $89.
Following yesterday’s 20% gain and Tuesday’s 7.2% gain. With such a benefit, Cathie Wood & Co. must be feeling a little glum.
Wood’s Ark Invest sold more than 1.4 million shares at around $53.This is after the moving average cost basis near $255 per share — so lost about 80% on the sale. The sale also follows reports of an SEC investigation into the company.
At this morning’s high of $116.30, the stock more than doubled what Ark was selling for. While the rally looks hard to maintain momentum, such a sharp, sudden rally still has to be painful for those who just stopped.
Now investors are wondering if Coinbase can continue to rise, or if today’s move will mark a short-term top for the stock.
Trade Coinbase Stock
I love when an old trendline or key level I draw on my chart reappears a few months later.
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In this case, I plotted the late April and early May breakdown level at $113.32 on the chart.
I also noticed a downtrend marker on the chart (blue line) that followed the lower lows of the first quarter.
While this is hardly a prediction, seeing stocks gap up and bounce back to these levels before fading sharply does illustrate what technical analysis can do for traders.
That’s not to say the fundamentals don’t work — they do — but knowing how to combine the two can pay huge dividends.
With today’s action, Coinbase stock fell sharply from a key level on the chart. This is bearish.
If price action is bullish, the stock will reclaim previous resistance and use it as support to push higher. In fact, the stock has risen sharply, so it only makes sense to deflate a little. But the bulls want to see it hold above the psychologically relevant level of $100 and the 21-week moving average.
If it continues to fade, bulls will want to see it hold in the $79 to $82 area. This was the previous resistance and marked the gap-filling level for today’s session. If this area holds, the bulls could have a potential long-term setup.
If the stock breaks below the 10-day moving average, the 21-day and 50-day could come into play in the low $60s.
On the upside, a move back above $100 puts the $113-$116 area in play, followed by the weekly VWAP indicator near $130.