Coinbase (COIN) stock price has nearly doubled since its June lows with further rally likely this year, according to a mix of technical and fundamental indicators.
Reversal of the symmetrical triangle for COIN
COIN went through a strong bullish reversal after dropping nearly 90% from its high of $368.90 in November 2021.
Coinbase’s stock price is up more than 95% to $75.27 as of the July 20 close when measured from its local low on May 12 at $40.83. Its recovery led to the formation of a symmetrical triangle pattern where the price forms a series of lower tops and higher lows.
Bearish symmetrical triangles usually turn into bearish continuation patterns. It is resolved after the price breaks below the lower trend lines to go down further. But in rare cases, a symmetrical triangle can form at the end of a downtrend, which leads to sharp bullish reversals.
As it seems, COIN has already entered the breakout phase of the symmetrical triangle reversal pattern. Notably, Coinbase stock closed above the upper trend line of the structure on June 28 while trading higher, as shown below.
The daily coin price chart features a symmetrical triangle reversal setup. Source: TradingView
COIN is now testing $80 as temporary resistance while looking for a further rally towards $135. The profit target is measured after calculating the maximum distance between the upper and lower trendline of the symmetrical triangle and adding the result to the breakout point.
The bullish target of the triangle appears to be closer to the COIN 200-day exponential moving average (the 200-day exponential moving average; blue wave in the chart above) near $153. Psychologically, this raises the possibility of COIN forming bullish wicks towards $153 if it reaches $135 this year.
This is 102% higher than the July 2 price.
Coinbase Rating: First Quarter Earnings
Coinbase’s first-quarter earnings were disappointed due to weaker-than-expected revenue and a significant drop in the number of users transacting per month.
The company did not disclose any cost management plans in the said earnings call, but a report in the Financial Times in June shows it will cut nearly a fifth of its workforce. Also, Coinbase ended its popular affiliate program in July, according to Business Insider.
“The target price for [COIN] is around $52 [in 2022],” Rumak Research, a group of financial analysts, noted in their recent assessment of Coinbase. The analysis presented was based on feedback on past market cycles, along with the Capital Asset Pricing Model (CAPM), as described below.
Coinbase evaluation based on the CAPM model. Source: Rumak Research / Alpha Search
The stock’s target price is close to $160, according to Rumak Research, when considering the current average market risk premium in the United States of 5.6%.
Related Topics: Coinbase to shut down Coinbase Pro to integrate trading services
In the same vein, Dr. Davidson analyst Christopher Brendler notes that Coinbase will survive the bear market despite its “financial situation,” including $3.4 billion in long-term debt. However, the company still stands at $6.1 billion.
“The fact that they have to slim down a little bit might not be the best news, but in the end, I know they won’t be in a position to struggle to survive,” Brendler told Forbes. Adding:
“They’ve been through it before and I’m sure they’ll be able to get through it again.”
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
