Robinhood Markets, Inc. (HOOD) stock rose almost 11% on Wednesday after the commission-free trading service announced plans to begin testing crypto wallets with select consumers next month. If all goes as planned, it plans to begin a wider deployment in early 2022, allowing clients to move chosen digital currencies in and out of the Robinhood app.
- Robinhood said it would begin testing crypto wallets in October, with a wider release planned for early 2022.
- On growing volume, Robinhood shares broke above two weeks of consolidation, which might lead to additional positive price movement.
- Coinbase shares have rebounded from the bottom trendline of an ascending channel, suggesting that the bulls want to defend this level.
Despite the fact that Robinhood is extending its crypto products, freshly listed digital currency exchange Coinbase Global, Inc. (COIN) gained ground on Wednesday as investors brushed off worries about more competition in the fast developing crypto trading and investment industry.
Let’s take a deeper look at the two equities and utilize technical analysis to identify potential trade opportunities.
Robinhood Markets, Inc. (HOOD)
The firm, best known for its commission-free stock trading, now allows cryptocurrency trading in popular currencies such as Bitcoin, Ethereum, Litecoin, and Dogecoin, but customers cannot move their digital assets to or from its platform. Adding a wallet will assist Robinhood in attracting consumers who want an all-in-one solution for investing in cryptocurrency rather than merely speculating on price direction. As of Sept. 23, 2021, Robinhood stock has a market value reaching $40 billion and is trading 23% above its initial public offering (IPO) price of $38. The stock has risen roughly 10% in the last month.
Following a brief surge into the mid $80s a few weeks after coming public, the Robinhood share price surrendered over half of those gains to trade just around $40 by early September. However, yesterday’s statement may re-energize the bulls, as the stock broke above two weeks of consolidation on rising volume. Those who purchase at these levels could expect a retest of the all-time high at $85 while controlling risk with a stop-loss order set just below the last consolidation region low at $39.23.
In technical analysis, consolidation refers to an oscillation between a well-defined pattern of trading levels. Consolidation is often defined as market indecision that ends when the asset’s price goes above or below the trading pattern.
Coinbase Global, Inc. (COIN)
Coinbase, which was founded in 2012, is the main cryptocurrency exchange in the United States, acting as a fiat gateway and trading platform for almost 70 million verified customers. Coinbase Pro currently determines costs through a pricing tier based on the maker-taker fee model, while Robinhood gets a percentage of the bid/ask spread. Coinbase recently abandoned plans to introduce a lending product because the Securities and Exchange Commission (SEC) threatened to sue, claiming that Coinbase’s intended “Lend” offering featured securities.
After SEC Chairman Gary Gensler warned legislators last week that the agency is working to develop a set of regulations to supervise cryptocurrency markets, investors should be more wary of a shifting legal climate when investing in equities with exposure to digital assets. Coinbase stock has a market value of $63.34 billion as of Wednesday’s closing and is trading 3% below its $250 Nasdaq pre-listing reference price.
Since bottoming out in mid-May, Coinbase shares have oscillated inside an ascending channel to create distinct support and resistance zones. Recently, the market has rebounded from the bottom trendline of the pattern, suggesting that the bulls want to defend this level. Active traders who take a long position here should consider setting a take-profit order at the channel’s opposing side somewhere north of $285. If the price fails to hold above this week’s low of $231.15, be prepared to leave with a little loss.
The price activity restricted between upward sloping parallel lines forms an ascending channel. This price trend is distinguished by higher highs and lower lows. An ascending channel is created by drawing a lower trendline that links the swing lows and an upper channel line that connects the swing highs.
Disclosure: At the time of publishing, the author had no investments in the aforementioned securities.
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