PukaCharts

Sofi - A possible repeating pattern

PukaCharts Updated   
BATS:COIN   Coinbase Global, Inc.
A repeating pattern and potential opportunity

All three companies have some form of crypto offering.

NUbank, Coinbase and Sofi appear to have similar bottoming patterns with double bottoms and a head and shoulders style reversal. The charts are not identical but you can clearly see a repeating testing of levels and a price cluster (red shaded area) which appears to be the new base forming offering good enough support for a trade set up. Under the price cluster red shaded area there are double bottoms.

I have been in the NUBank trade since Jan 2023 at $3.51 and I noticed COIN had a similar bottoming pattern in June 2023 but it had not broken out yet, so I shared a comparative chart at the time and took a position in COIN, noting the stop as the bottom of the red box. I have shared individual charts on COIN and NU to this effect also.

Since June COINBASE has had 120% increase and I believe this will continue.

Whilst its price movement since the sharing in June is not identical to NUbank, you can clearly see a parallel channel bottoming, head and shoulders reversal and similar price clusters which i marked up.

I was most confident on the COIN trade when it had its strong pull back from Jul - Oct, here I double the position when it came back and bounced off the the 200 day moving average perfectly.

Two of the great trades of this year from me which I am still currently holding NU and $Coin.

I believe there maybe an opportunity for this much smaller company $SOFI. A trade set up is there with a defined stop and good risk to reward (outlined on chart). I have not entered this trade yet, but i may in coming weeks. I will keep you posted.

PUKA
Comment:
Just some additional info and summary of my thoughts

I invested in NU in Jan 2023 and thereafter having had success with the set up and bottoming pattern, I then noticed a similar (not identical) pattern on COIN in June 2023 and I built a position in COIN and have had significant success again.

I am now eyeing SOFI as it has a similar bottoming pattern and there is a trade structure I can stomach for a small position.

I want to emphasize that this is a much much smaller company and a higher risk trade, so I will be keeping the position size to the smaller end. Sofi has a market cap of $6.5bln (NU is $39 bln & Coin $28 bln)

The Repeating Pattern
✅ Parallel Channel Bottom
✅ Head and Shoulders bottom reversal
✅ Price support cluster (red shaded areas) which has double bottoms thereunder (purple cups). There are almost line little springs.
✅ Two obvious initial failures to break out of the top of the parallel channel (red caps)
✅Thereafter, a 3rd stronger price move trying to break out of the top of the parallel channel (green shaded box). These appear to have more upwards price pressure and this is where I start to recognize the supporting price cluster (red shaded area).
✅ The real interesting and reassuring aspect of the trade is the supporting price cluster (red shaded area and red box) above the double bottom. Its a messy area but its a highly traded area and we can place a stop at the bottom of the red box because if we grinded down through this area, we will have lost a large area of volume support and it wouldn't be worth it.

At present you could enter a trade allowing for a 10% loss. Position size needs to be small due to such a large 10% potential loss.

There is a descending wedge at present and you could play this on a break out or take a stamp at the trade here. Keep in mind if your position of 1K (potential loss $100), $10k (potential loss $1000), so find a loss you can tolerate or average in but have a defined stop for this high risk trade. The time horizon is 3 months to 9 months for this trade minimum.

There is significant negative news around Sofi at present but its the sort of negative news that I really like. Regarding the CEO buying up and holding a lot of shares (too many according to many outlets), Cancellation of a TGL event that is sponsored by Sofi due to construction/power failure on a dome. Also a rumor that Sofi may pull its crypto offering. This negative news is not life or death for the company and could be superficial at best. Time will tell. I love a negative news event with a bottoming pattern.

As always folks, no guarantees, manage your stop to your risk tolerance, and we will revisit this in coming weeks.

Also, if anyone recognizes these patterns as potential Wykoff's or something similar, please do give your opinion. And if you see another similar pattern on another chart do share it in the comments and ill dig deeper to help out.

Thanks again

PUKA
Comment:
Since sharing this on Nov 25th we are now in 45% profit

I am now raising my stop to $7.82 which is the most recent higher low on the chart and would leave us with a 21% profit if structure is broken and we lose this higher low.

After I shared this chart, I got a lot of questions about Sofi and the bad news around it, the closure of the crypto offerings at the firm .Etc... Folks, forget the narratives and news. The chart was clear and had structure allowing for a risk averse trade, why question what price is telling you? Price is the truth. On Sofi it is growing brokerage for all assets, crypto is a small industry and whilst the halo effect of its association would be a detriment, a lot of risk averse people and funds might reinforce their alignment with Sofi because of this crypto removal decision, Apex are their clearing house for crying out loud. Sofi is not going anywhere. We can never understand what exactly is going on in a company, the narratives shift like the weather, and im sure next week Sofi might have a great or bad company news narrative, regardless, we have price to tell us what’s happening, and we can use price and price structure to allow us to frame a risk averse trade.

Let price guide you, strict stop loss raised to $7.82 in accordance with the structure of price as its presented which lock in a profit, however, we could very easily go higher.

PUKA
Comment:
SoFi - SOFI

I originally shared this repeating pattern in Nov 2023 and provided the structure and rationale in the below post.

NUBank led Coinbase led SoFi (in progress)

Incredibly this pattern appears to be repeating again.

I really want to stress that there was very negative news for SoFi over recent months from the removal of their crypto offering to issues with a major advertisement prop. Throughout I referred back to this chart and noted it as a buying opportunity off the diagonal support or red box. A lot of people disagreed with me on this and I seen people selling due to the crypto news.

Earnings were released today confirming the SoFi are having outstanding growth and have a lot of future potential.

In summary

Earnings:
Rep: 0.02 ✅394.68% + surprise to the upside✅
Est: 0.004

Revenue:
Rep: $594.24 ✅3.98% + surprise to the upside✅
Est: $572.00

Sofi being a much smaller company at $3.7B versus COIN ($30B) and NU ($45B) means it can move in multiples much faster and easier than Nu or Coin.

This could end up being the trade of the year and now have a structure we can play too which will help protect us. We know what should and should not happen looking at the prior charts patterns.

PUKA
Comment:
Everything still looking good.

We should hold the diagonal, if we do not i may consider an exit.

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