Potential Relief Rally to $8-9 upcoming?
Updated
Price action in the MJ Sector are known for their extremely quick movements and the euphoria is short lived as retail traders take their profits. A quick and massive short squeeze plus hype from overall market sentiment is what it will take for this movement (Since much of the traders of ACB are retail traders). Historically it has done exactly just that.
Waiting to see if the next 2W candle (Ending January 31, 2020) creates a higher high above $3.02 and closes above $2.92 with strong volume. A close above 2.92 will form a bullish hammer on ACB's monthly chart, further solidifying this trend change.
Note: Historical price action between $4-5 moves quickly as there is little support/resistance developed in this zone. Strong buying pressure that lasts until $4 will leave many shorts who entered from mid November to now in the red, which may potentially cause a short squeeze into the neckline of the monthly Head and Shoulders (Around $6). A short squeeze that causes an artificial increase in price will further drive in retail investors to buy more from this hype, and perhaps lead to another short lived Bull Market as we have seen occurred thrice before.
Waiting to see if the next 2W candle (Ending January 31, 2020) creates a higher high above $3.02 and closes above $2.92 with strong volume. A close above 2.92 will form a bullish hammer on ACB's monthly chart, further solidifying this trend change.
Note: Historical price action between $4-5 moves quickly as there is little support/resistance developed in this zone. Strong buying pressure that lasts until $4 will leave many shorts who entered from mid November to now in the red, which may potentially cause a short squeeze into the neckline of the monthly Head and Shoulders (Around $6). A short squeeze that causes an artificial increase in price will further drive in retail investors to buy more from this hype, and perhaps lead to another short lived Bull Market as we have seen occurred thrice before.
Note
Did not receive the confirmation candle after the Bullish Hammer ending January 17. Instead created an inside bar that pulled back. Pullback candle is on notably less volume however, and is potentially forming an inverted head and shoulder reversal pattern on the daily chart since December 23, 2019. Caution to be advised however, as estimated earnings report date on February 10, 2020 may react bearish. Earnings will highly dictate the next candle ending February 14. Expect lots of volatility upcoming. Next candle is unlikely to be another inside bar due to investor reaction to earnings. Have appropriate stops.
Longs looking to enter should feel more confident if ACB has a day that closes above $2.88 CAD with notable volume (Closing with above 15M) between now and February 14. Those more conservative may wait until $3.02 CAD breaks.
Will keep updates every two weeks regarding this idea.
Would appreciate any feedback or comments.
Note
Candle ending February 14 broke bearish due to CEO Terry Booth stepping down as well as earnings not showing growth. Last month on January 17 (When I originally created this idea), it seemed likely that $1.96 was potentially the bottom due to the bullish hammer with strong volume. The bear market however is still strong in this stock as we did not receive a confirmation candle after January 31, and further weakness now with new 52 week lows set at $1.90. The original idea that I had mentioned last month is a lot less likely to occur in the fashion that was originally predicted. If it were to somehow move up to $8-9 in the coming months, it would be due to other technical/fundamental reasons. As with any technical analysis, ideas become stronger and weaker as charts confirm or deny the signal. It's safe to assume as of this moment that this idea is no longer as effective, as lack of confirmation and a new bottom forming reveals that technicals are still in a bearish market.
Will wait another two weeks to see how the next candle forms. It may take months as of this date to get another signal that a bottom has formed. Will try to update and form an idea once that occurs. As of now, ACB is still looking for it's bottom and bears are in control.
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