Market Overview

Signs An Aurora Cannabis Technical Breakout May Be Imminent

Signs An Aurora Cannabis Technical Breakout May Be Imminent

Aurora Cannabis Inc (NYSE: ACB) is off to a hot start to 2019, but the stock is still trading well below its 2018 highs. The stock has been trading in a very narrow range for roughly a month now, and technical traders are anticipating a breakout in one direction or another in the near future.

Technical Trends

Aurora shares have been trapped in a narrow horizontal trading range between around $8.50 and $9.25 since mid-March. For a stock with a history of extreme volatility, Aurora has been stuck in an extended low-volatility consolidation period.

Aurora last tested the top of the consolidation channel April 22 when it closed at $9.23 before turning lower once again. It bounced off the bottom of the channel when it closed at $8.50 on April 15 and then bounced after opening at the same level the following day.

Despite the extended breather, Aurora shares are sitting on overall year-to-date gains of 81.7 percent, giving bulls reason for optimism the stock is simply digesting the large move before making new highs.

A look at a longer-term chart shows Aurora shares have been in a bullish trading channel since December of last year, when the stock bottomed at around $4.50. Aurora is currently trading near the bottom of that longer-term bullish channel, suggesting a bounce could be coming in the near future.

Since that time, Aurora has made a series of higher highs and higher lows, the trademark of a bullish trend. Its most recent high was $10.32 back in March.

Levels To Watch

Sometime in the next week or two, one of the two trading patterns must break. The support line of the bullish longer-term channel is converging with the resistance line of the shorter-term neutral trading channel forming an ascending triangle pattern. The ascending triangle pattern typically results in a bullish breakout to new highs when the rising support line eventually forces the stock above the resistance line.

In the near term, Aurora traders should watch the key near-term support level at $8.50, the bottom of the consolidation channel. A breakout below $8.50 would take out both the neutral technical support line and the bullish longer-term support line. Below $8.50, the next potential support level would be February lows of around $6.70.

If Aurora trades higher in the coming days, a breakout above $9.25 could put the stock back on track to test 2019 highs of $10.32 in the near term. In the longer-term, the stock’s all-time high of $12.52 could be the last source of major resistance keeping the stock from a blue sky scenario.

At time of publication Wednesday afternoon, the stock traded at $9.09 per share.

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