Is Coinbase Inventory About to Crater? This is One Solution to Exploit It | Do not Ignore This Chart!

With an astounding SCTR rating of 99.6, Coinbase (COIN) is hovering to the solar, however its wings of momentum seem like melting.

Regardless of hitting a two-year excessive (and Bitcoin hitting an all-time excessive), all the crypto marketspace is in a foggy haze of confusion, stemming from the Federal Reserve’s March 11 Financial institution Time period Financing Program (BTFP) expiration (which may have an effect on liquidity and have an effect on numerous markets together with Bitcoin), and the upcoming Bitcoin halving mid-April. COIN’s potential bearish setup is evident. As an apart, it additionally got here up as a part of a bearish Crammed Black Candles scan utilizing StockCharts’ scan engine.

So, if you happen to’re trying to maul just a few hopeful bulls within the near-term, this is your potential kill field.

CHART 1. DAILY CHART OF COINBASE.

The Relative Power Index (RSI) locates COIN’s worth, nicely inside “overbought” territory. However if you happen to have a look at the Chaikin Cash Move (CMF) studying, not solely do you see a dramatic divergence between shopping for strain and hovering costs, however the CMF is now beneath the zero line, hinting that sellers are doubtlessly taking on. But if you happen to have a look at the present candle, you see a robust rejection off the session lows, that means that a whole lot of patrons jumped in to create the “pin bar” that we now see (see blue circle highlighting the wick).

So, what do you assume may occur as soon as worth falls beneath the pin bars low?

One Attainable Solution to Commerce This

There are seemingly a number of cease losses proper beneath the wick at $242.09 (see black dotted line). If costs fall beneath this stage, it is prone to set off a cascade of promote orders (cease losses).

• In the event you’re trying to make the most of this bear run, you may set a promote cease order to go brief at $242.05.
• You may consider putting a cease loss (purchase to cowl) at $271.70 (simply 5 cents above the latest swing excessive).
• Your first goal can be wherever within the vary between the  center Bollinger Band and the resistance line at roughly $188.00.
• Your second goal can be on the help line situated at $166.00, the final main swing low.

Keep in mind that this isn’t a long-term commerce however a short-term bearish alternative. It has no bearing on any elementary case—bullish or bearish—surrounding COIN’s long term prospects.

The Backside Line

Regardless of its stellar SCTR rating of 99.6 and seemingly unstoppable ascent, Coinbase (COIN) could also be flying too excessive, risking a dramatic fall. For many who scent a bearish alternative, this potential descent provides a transparent setup for entry and exits. Watch out! Going brief the market can assume limitless. Therefore, the cease loss is just a few cents above the best excessive.

Find out how to Run a StockCharts Scan

Discovering the fitting shares and exchange-traded funds (ETFs) to commerce could be tough. However, with a little bit work, you possibly can create a technique that identifies just a few promising prospects.

Thankfully, it is not too exhausting to find out how. Simply stick to those steps:

• Choose (or create) just a few completely different scan standards
• You should definitely run these scans repeatedly
• Analyze the shares (or ETFs) that your scan has recognized
• Decide your general buying and selling setup (together with your entry and exit standards)

The StockCharts Scan Engine is beneficial for narrowing down shares and ETFs that match sure necessities. It comes with a bunch of ready-made scans which might be a superb place to begin. As you get the cling of those scans, you possibly can regulate them or create new ones that align together with your buying and selling objectives.

For instance, this text was prompted by a Runaway Hole Ups scan. As you possibly can think about, there are a lot extra scans you possibly can run. Check out the StockCharts Pattern Scan Library (Charts & Instruments > Pattern Scan Library).

Disclaimer: This weblog is for academic functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your personal private and monetary state of affairs, or with out consulting a monetary skilled.

The writer doesn’t have a place in talked about securities on the time of publication. Any opinions expressed herein are solely these of the writer and don’t in any means characterize the views or opinions of some other particular person or entity.