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4 weeks ago
#AuroraCannabis – Don’t get Caught in the Middle of this Fight | $ACB
At long last, the Bulls have come back into the Cannabis Arena and have challenged the Bears to a bit of a fight. This week’s price action, however should be kept in some context, before investors start chasing fast gains. The stock of Aurora Cannabis Inc. (NYSE: ACB) has potential upside of approximately +470% to get back to its 2018 peaks, thus we should consider why would we be buying this rally. This may be no more that a dead cat bounce and the volume profile would consider it is just that; rather than a short squeeze.
Other marijuana stocks, such as Tilray and Cronos. have on the other hand, seen much larger volume traded: as bullish sentiment had also swayed towards the larger kingpins of the industry. Both Tilray and Canopy Growth have made significant appointments to their management and board, while also reassuring investors with some positive commentary about profitability and the future growth prospects for their companies.
ACB is the opposite situation: Management is in disarray, finances are extremely questionable, and a seemingly ever intense social media hate campaign that continues to scare off the retail-investor community; all while that communications from the company are relatively non-existent. Despite all that, ACB has a loyal band of core investors; who are hoping for the next Tesla like slaying of the bears.
Now, Let’s Look at Some $ACB Charts for Signs to Help the Bulls Strengthen their Resolve: Beginning with the Daily Chart.
From a Bullish Perspective, we should Possibly Consider the Following Technical Signals on the Daily Chart.
- The RSI has been front running the price action with bullish divergences present, which ACB is making a series of bullish higher lows and higher highs.
- The stock has respected the horizontal support of $1.72, and bounced convincingly.
- Histogram is ticking higher and green, and it needs to maintain that pattern.
- Stochastic is in a bullish reversal, having crossed on Jan 9th, which is signalling a possible reversal.
- ACB has gained support from the 7- & 12-day Moving averages.
Now, From a Pessimistic Perspective, It is Clear From a Pessimistic Perspective that the Volume Profile is Not in the Middle of a Short Squeeze, as we would Be Expecting up to 4x the Daily Volume in that Case.
Factors to Consider on the Weekly Chart:
- RSI has made nice reversal from an oversold level; bullish sentiment would increase by making series of new higher highs and higher lows.
- The 7-day moving average has acted as resistance since May 2019 a weekly close above would be significant for the stock.
- Stock bounced strongly off monthly support at $1.72.
- Point of Control Line (red) sits at $2.46 a move above this level could ignite some heavy buying.
- Stochastic is in reversal and has crossed bullishly.
- Histogram has been steadily climbing and a cross over the Zero line would be a short cover signal.
- MACD is about to cross over signalling a change of trend, historically a very bullish signal that resulted in sustained rallies. (see vertical blue lines)
- Volume is increasing as possibly buyers replace sellers.
Targets to Consider:
Short term – $2.71 – Daily resistance.
Medium term – $3.54 – Dropping 100-day moving average & horizontal daily price resistance.
Longer term – $4.63 – To Weekly horizontal price resistance level.
Short term above the 34 day moving average which is currently holding as resistance with next target the 50 day Moving Average.