Coinbase Global, Inc COIN is set to print its fiscal fourth-quarter financial results after the market closes on Thursday, and the stock was edging about 3.5% higher heading into the event.
When the cryptocurrency trading platform printed a third-quarter revenue beat on Nov. 2, the stock closed 1.4% higher the following day and subsequently continued in a steep uptrend, which brought Coinbase to a Dec. 28 high of $187.39.
For that quarter, the company beat on the top line, reporting revenue of $674 million, which exceeded a Street consensus estimate of $653.19 million.
For the fourth quarter, analysts estimate Coinbase will print earnings of 2 cents per share on revenues of $823.85 million.
On Thursday, JPMorgan analyst Kenneth Worthington upgraded Coinbase from Underweight to Neutral rating on Coinbase and maintained an $80 price target. The price target suggests about 51% downside for the stock.
For the fourth quarter, crypto traders and investors will be watching to see how much of Coinbase’s revenue was brought in through Bitcoin and Ethereum trading specifically. The two apex cryptos experienced a bull run during the quarter, with Bitcoin surging almost 60% between Oct. 1 and Dec. 31.
From a technical analysis perspective, Coinbase’s stock looks mildly bullish, trading in a strong uptrend and setting up a possible three-gap-up pattern, but also in need of a pullback.
Bullish traders and investors looking to play the possible upside in Coinbase stock but with a diversified approach may choose to take a position in AXS 2X Innovation ETF (TARK). TARK is an actively managed double-leveraged ETF aiming to return 200% of the daily performance of ARK Innovation ETF (ARKK). Coinbase is the top holding within ARKK, with a 9.77% weighting, followed by Tesla at 7.91%.
For traders bearish on Coinbase, AXS Short Innovation Daily ETF (SARK) is an actively managed ETF aiming to inversely track the daily performance of ARKK and its basket of holdings.
The Coinbase Chart: Coinbase gapped up from a bull flag pattern on Wednesday and on Thursday, the stock formed a second gap higher. Coinbase’s bull flag pattern was formed between Feb. 7 and Tuesday, with the pole formed over the first four trading days of that pattern and the flag formed on Monday and Tuesday.
- When a stock gaps higher twice in a row, it can suggest a third-gap-up pattern in on the horizon. If that happens, Coinbase is likely to retrace on Monday to complete a three-gap-up-reversal formation. A retracement is likely to come over the next few trading days because Coinbase’s relative strength index (RSI) is measuring in at about 67%, which puts the stock near overbought territory.
- Bearish traders want to see Coinbase close Thursday’s session flat or near the low-of-day, which would cause the stock to print a bearish doji or shooting star candlestick, respectively. If Coinbase suffers a bearish reaction to its earnings and falls lower on Friday, the possibility of a three-gap-up pattern will be negated and the stock is likely to at least form another higher low within its current uptrend.
- Coinbase has resistance above at $177.45 and at $187.39 and support below at $162.20 and at $140.53.
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