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

April 20, 2021 1:38 pm
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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 (NASDAQ:TLRY) and Canopy Growth Corporation (NASDAQ: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.

cgc_april_20.png

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.

tlry_april_20.png

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

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