Key Takeaways
Coinbase ( COIN ) shares surged to a three-year high Monday as investors bet that higher trading volumes and a more favorable regulatory environment under the incoming Trump Administration could benefit the crypto exchange.
The move comes as Bitcoin ( BTCUSD ) set another record high on Monday above $88,000, and Ether ( ETHUSD ), the native token of the Ethereum blockchain, rose to a multi-year peak. Rising cryptocurrency prices boost Coinbase by generating more trading activity, which in turn boosts the company’s revenues through increased fees.
Looking ahead, Coinbase could also benefit from a new digital asset regulatory framework proposed by Republican senator Tim Scott, who is expected chair the Senate’s Banking Committee after the GOP regained control of the upper chamber following the election, a development that would reduce compliance requirements for crypto trading and custody platforms.
Coinbase shares rose 20% during the regular trading session Monday, before rising nearly 3% in extended trading to around $333.
Below, we break down the technicals on the Coinbase weekly chart and point out key price levels other investors may be watching out for.
Descending Channel Breakout
Since forming a textbook inverse head and shoulders bottoming pattern over a 12-month period between June 2022 and 2023, Coinbase shares have tracked mostly higher.
More recently, the stock traded within a seven-month descending channel before staging a decisive breakout above the pattern’s upper trendline last week, with follow-through buying continuing into this week.
Importantly, last week’s breakout occurred on the highest volume since early March, signaling strong conviction from larger market participants behind the move.
Let’s identify key overhead levels on the Coinbase chart that investors may be watching and also point out an important support area to monitor during retracements.
Key Overhead Levels to Watch
The first higher level to watch sits around $369, a location on the chart where investors who have bought Coinbase shares at lower prices could seek to lock in profits near the prominent November 2021 peak .
Further upside could see the shares retest the $430 level, an area on the chart that may attract significant selling pressure near the stock’s April 2021 all-time high (ATH) .
To project an overhead level to monitor above the ATH, we can use a bars pattern that analyzes historical price trends on the chart to predict future moves. To apply this technique, we take the stock’s trending period from June 2023 to March this year and reposition it from the September swing low . This forecasts a price target of around $695.
Important Support Level to Monitor
Upon a pullback in the stock, investors should keep a close eye on the $220 level, an area where the shares could attract support near the initial breakout area, which also corresponds with a trendline that connects a range of comparable price action on the chart dating back to May 2021.
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As of the date this article was written, the author does not own any of the above securities.
