Coinbase Global, Inc (NASDAQ:COIN) jumped over 4% at one point Tuesday after consumer price index data released by the U.S. Labor Department showed inflation ticking lower in January.
Inflation rose 6.4% last month compared to 6.5% in December, which caused Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) to rise 2% and 4%, respectively, although the number came in above the 6.2% that economists expected.
The S&P 500 initially rose about 0.5% higher in reaction to the data before falling below Monday’s close. By 10:30 a.m., the stock market and crypto sector had cleared the pump higher, pushing Coinbase down to nearly flat.
From a technical analysis standpoint, Coinbase rejected the 200-day simple moving average (SMA) as it moved higher, indicating that the stock needs further consolidation below that level before another attempt to regain the area.
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The coin base chart: Coinbase also attempted to recapture the 200-day SMA on Friday and failed. The 200-day SMA is an important watch indicator that acts as an important area of support and resistance, making it difficult for a stock to break through the area and stay above it on the first few attempts.
- Coinbase has been trading near the 200-day since January 27th, briefly breaking above the area on February 2nd before falling below the level on February 9th. As Coinbase fell below the 200-day SMA, the stock also confirmed a new downtrend was intact by printing a lower low.
- Coinbase’s last low was formed on February 8 at $73.97 and the last confirmed lower low was printed on Monday at $53.66. If Coinbase trades lower on Wednesday, Tuesday’s intraday high will act as the next highest low in the pattern.
- If Coinbase closes the trading day below the $58 mark, the stock will print a star candlestick, which could indicate that lower prices will return on Wednesday. If that happens, the stock could find support at the 50-day SMA, which is trending around $48.
- Bullish traders want to see Coinbase chop sideways near the 200-day SMA and then for a lot of bullish volume to come in and break the stock up above the level. The 50-day SMA is curling up, which is a good sign for the bulls.
- Coinbase has resistance above at $60.99 and $83.32 and support below at $50.34 and $40.15.
Read next: Coinbase CEO Brian Armstrong advocates for clearer crypto regulations in Washington DC
Image courtesy of Coinbase.
