COIN (Long) - Rearing its bullish head Mentioned several times across my charts, but still important to mention, I am a strong proponent of simple charts , preferring to rather watch price action for days on end - the robust reversal in crypto and this NASDAQ:COIN 's nearly perfect base are hard to miss
Fundamentals
For those who don't know, in the last few weeks, crypto has exhibited some of the lowest correlation with broader stock market ever, consolidating when market was rallying, and recently, surging higher while market was falling.
Although we cannot completely discount stock movement (Coinbase is after all a stock), the directionality of the crypto markets seems to have the upper hand with stocks like NASDAQ:COIN and NASDAQ:MSTR
In more granular terms, the firm has been performing strongly , with a swarm of institutional clients (selecting Coinbase as the most trustworthy custodian), robust revenue growth (50% in the last 12 months) and impressive profitability (net profit margins above 25%)
The valuation is not cheapest, but we know better than to be scared off by P/E between 40-50 (read William O'Neill for more info on this)... but this is not what attracted me to Coinbase this time - that will be the chart
Technicals
Firstly, crypto charts, mainly Bitcoin CME:BTC1! , look strong - orderly accumulation with potental for new highs going into the election (seasonally strong period)
Strong, round accumulation base , although I would have liked one more leg down to the base before the breakout, but asking for perfection is not how markets work
RSI is positive and rising (though a little choppy) while the distance from moving averages gives you good risk/reward and historically marks breakouts (doesn't mean that will repeat!)
Strong base, robust momentum, good group performance (crypto) and incoming catalyst (earnings)
I have entered the trade today, exactly on the breakout. Personally, I will use the entry (purple line) as a stoploss, potentially re-enter if the pattern allows it. Timeframe is 3-4 months. Alternatives include (i) waiting for a break on earnings (ride the momentum, more certainty, but less potential for appreciation), (ii) waiting for the break of the higher high (better confirmation of the breakout or (iii) use the bottom of the base for stoploss (higher risk preferences). Fake breakouts and slumps on earnings should be used to exit.
Hope this gives a good overview. I believe the seasonality (high spending around elections = political window-dressing) favours both crypto and stocks for medium-term outlook (and I understand how frustrated everyone is that we haven't had a crash - don't forget, pessimism will lose you money 90% of the time.
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