Tilray And Canopy Growth Need A Trend Change: Could SAFE Act Save Them?

4/20 celebrations come during a seasonally bearish time for cannabis-related stocks.

Bulls can still find bullish setups and over-sold bounces, however, and long-term investors can find good entries at the bottom of trends.

Tilray TLRY and Canopy Growth Corporation CGC have been trending downwards since reaching 52-week highs on Feb. 10.

While spring and summer usually cause a low-volume lull in cannabis stocks, the possibility of cannabis-friendly policy moves in the U.S., such as the passage of the SAFE Banking Act through the Senate, could change the trend this year.

The Canopy Chart: Canopy Growth has been trading in the gap it left behind on Jan. 6 for the past six trading days. Canopy Growth’s stock has been trading in a textbook-perfect downtrend since March 16, making lower highs and lower lows on the daily chart.

The stock is trading below both the eight-day exponential moving average (EMA) and the 21-day EMA, with the eight-day EMA trending below the 21-day EMA, which is bearish. Canopy Growth’s stock is trading directly on top of support at $26.71 and, because it has so far failed to drop below this level, the stock may have found a new bottom.

See Also: 3 Cannabis ETFs For 4/20

Bulls want to see bull volume enter Canopy Growth’s stock and for it to make a bullish trend change. Bulls would like to see the stock make a higher high over $33.02, which would also push it over a resistance level.

Bears want to see Canopy Growth continue to test support at $26.71 to eventually weaken it. If the stock loses that support level, it could see $24.60 before finding another support level.

The Tilray Chart: Like Canopy Growth, Tilray’s stock has also been trading in a perfect downtrend for five weeks, making lower highs and lower lows. It's trading below the eight-day EMA and 21-day EMA, with the eight-day EMA trending below the 21-day EMA which is bearish. These EMAs will also act as resistance if Tilray’s stock attempts to move higher.

Tilray’s stock is trading directly above a support level at $16.74 and, since the stock has flattened out, this could be its new bottom.

Bulls want to see bullish volume come into the stock for it to make a trend change. Tilray’s stock needs to push up over $24 to make a higher high, which would also pop it up over resistance at $20.80.

Bears want to see support at $16.74 to weaken and eventually break. If Tilray loses $16.74, there's not much support until $11.87.

CGC and TLRY Price Action: Tilray was trading around $15.89 at publication time. Shares of Canopy Growth trade around $25.62.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: CannabisLong IdeasShort IdeasTechnicalsMarketsTrading Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Cannabis rescheduling seems to be right around the corner

Want to understand what this means for the future of the industry? Hear directly for top executives, investors and policymakers at the 19th Benzinga Cannabis Capital Conference, coming to Chicago this Oct. 8-9. Get your tickets now before prices surge by following this link.


Loading...