Bitfarms Ltd.

Bitfarms Ltd. (TSX: BITF) is a Canada-based cryptocurrency mining company. The Company provides computing power to cryptocurrency networks such as Bitcoin, Ethereum, and Litecoin etc. It earns fees from each network for securing and processing transactions.

On August 03, 2021, we recommended a ‘Speculative Buy’ rating on BITF for 2-4 weeks duration from the technical analysis standpoint. However, considering the recent price action, technical indicators, resistance level analysis, and double-digit returns; we are of the view that it is prudent to book profits at the current levels. Hence, we give a 'Sell' rating on the stock at the CMP of CAD 8.96 on Aug 09, 2021. The summary of our 'Sell' rating and price movement since the previous recommendation on BITF is provided as below:

Price action and technical indicator analysis (on the Weekly chart):

BITF’s prices moved up by ~81.23% from the recommended entry-price, considering the high of CAD 8.96 on August 09, 2021. The stock price is trading in the upward trajectory and hovering around the horizontal trendline resistance zone at CAD 9.05 and continuously sustaining below the trendline resistance level on the weekly chart. Now the prices are hovering near the major resistance level of CAD 9.05, and we can expect profit booking in it. RSI (14-period) is trading near the overbought zone at ~68.52, indicating a possibility of price reversal. However, prices are still sustaining above 21-period and 50-period SMA, acting as the support zone for the stock.

Conclusion:

Based on the above-mentioned price action, RSI (14-period), and resistance level analysis, we recommend a ‘Sell’ rating on BITF and suggest investors book profit at the CMP of CAD 8.96 as on August 09, 2021.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume and we consider stocks with greater than or equal to 200,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is August 09, 2021, Toronto, ON, Canada 10:00 AM (GMT-4). The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

CAD: Canadian Dollar

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Investors can consider exiting from the stock if the Target Price mentioned as per the technical analysis has been achieved and subject to the factors discussed above.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.