Is Coinbase stock about to crater? One way to exploit this is | Don’t ignore this chart!

With an impressive SCTR score of 99.6, Coinbase (COIN) is soaring toward the sun, but its wings appear to be melting.

Despite hitting a two-year high (and Bitcoin hitting an all-time high), the entire cryptocurrency market is in a fog of confusion due to the Federal Reserve’s March 11 Bank Term Financing Program (BTFP) expiration (which could impact liquidity). there is. and the Bitcoin halving scheduled for mid-April (which will impact various markets, including Bitcoin). The potential bearish setup for COIN is clear. As a side note, this also appeared as part of a bearish filled black candle scan using StockCharts’ scan engine.

So if you want to beat a few hopeful bulls in the near term, here’s a potential kill box.

Chart 1. Coinbase daily chart.

Relative Strength Index (RSI) Look for the price of COIN within the “overbought” zone. But if you look at the contents Chaykin Money Flow (CMF) As you read, you can see that there is a dramatic difference between buying pressure and surging prices, as well as that CMF is now below the zero line. There is a potential acquisition by the seller. But if you look at the current candles, Strong rejection at session lowsThis means that many buyers have jumped on board to create the “pin bars” we see today (see the blue circles highlighting the wicks).

So what do you think will happen if the price falls below the pin bar low?

One possible way to trade this

There are likely to be some stop losses just below the wick at $242.09 (see black dotted line). If the price falls below this level, a series of sell orders (stop losses) are likely to occur.

• If you want to take advantage of the downtrend, place a sell stop order at $242.05.
• You might also think about setting a stop loss (buy to cover) at $271.70 (just 5 cents above the most recent swing high).
• The first target would be the range between the middle Bollinger Bands. Resistance is around $188.00.
• The second target would be support located at the last major swing low at $166.00.

Keep in mind that this is a short-term bearish opportunity, not a long-term trade. This has nothing to do with any fundamental situation (bullish or bearish) surrounding COIN’s long-term prospects.

conclusion

Despite an outstanding SCTR score of 99.6 and a seemingly unstoppable rise, Coinbase (COIN) may be flying too high and risking a dramatic downside. For those who sense a bearish opportunity, this potential pullback provides a clear setup for entry and exit. be careful! We can assume that the short selling market is unlimited. So the stop loss is a few cents higher than the highest high.

How to run a StockCharts scan

Finding the right stocks and exchange-traded funds (ETFs) to trade can be tricky. But with a little effort, you can create a strategy that identifies a few promising prospects.

Fortunately, it’s not that difficult to learn how to do. Please follow these steps:

• Select (or create) several different scan criteria.
• Run these checks regularly.
• Analyze the stocks (or ETFs) identified by your scan.
• Determine your overall trading setup (including access and liquidation criteria).

StockCharts Scan Engine This is useful for narrowing down stocks and ETFs that fit your specific needs. It includes many ready-made scans that are a good starting point. Once you become familiar with these scans, you can adjust them or create new scans that fit your trading goals.

For example, this article was flagged by a Runaway Gap Ups scan. As you can imagine, there are many more tests that can be run. Try the StockCharts Sample Scan Library (Charts & Tools > Sample Scan Library).

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.

The author had no positions in any securities mentioned at the time of publication. All opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.