Canopy Growth Corporation (NASDAQ:CGC) and Tilray, Inc (NASDAQ:TLRY) gapped up slightly higher on Wednesday after running up to 7.43% and 12.87%, respectively, in the after-hours trading session on Tuesday.

The beaten down cannabis sector has seen renewed interest recently, with several high-profile mergers and acquisitions making headlines as the larger producers attempt to gain control over the market. The most recent acquisition, which was announced on Tuesday, will see Cresco Labs, Inc (OTC:CRLBF) acquire Columbia Care (OTC:CCHWF) for a whopping $2.1 billion.

The deal will make Cresco Labs the leader in the North American cannabis industry, with yearly revenue of over $1.3 billion.

Canopy Growth and Tilray, which are also leaders in the space, have made several acquisitions as well over the past few years. Perhaps most notably, Canopy Growth acquired Supreme Cannabis Co in April 2021 for $345 million and in May of last year, Tilray merged with Aphria Inc. to create the “new” Tilray with a combined market cap of $3.3 billion at that time.

Even as the vast number of companies who jumped into the space in the run-up to legalization in Canada continues to consolidate, the seeming unwillingness of the U.S. government to make cannabis legal at the federal level is likely to continue weighing the stocks down. For technical traders, however, both Canopy Growth and Tilray are flashing signs the bottom may be in and a larger rebound to the upside may be on the horizon.

It should be noted, however, that events such the general markets turning bearish, negative reactions to earnings prints and negative news headlines about a stock can quickly invalidate bullish patterns and break-outs. As the saying goes, “the trend is your friend until it isn’t” and any trader in a bullish position should have a clear stop set in place and manage their risk versus reward.

See Also: Can Marijuana Help Reduce PMS Symptoms? Canopy Growth's CBD Efficacy Study Reveals

The Canopy Growth Chart: On March 14 and March 15, Canopy Growth printed a bullish double bottom pattern near the 52-week low of $5.62 and has since reacted to the formation, soaring up 37.48% to reach a high-of-day on Wednesday of $7.74.

• On Tuesday, Canopy Growth fell lower to open the trading day just above the eight-day exponential moving average, which set a higher low to confirm the stock is now trading in an uptrend. For the trend to continue, Canopy Growth will need to remain above the $6.80 level on the next pullback.
• Canopy Growth attempted to regain support at the 50-day simple moving average (SMA) on Wednesday morning, but failed and rejected the level. Bullish traders will want to see the stock regain the 200-day as support over the coming days, which would indicate longer-term sentiment has turned bullish.
• Canopy Growth has resistance above at $7.36 and $9 and support below at $6.12 and $5.63.

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The Tilray Chart: Like Canopy Growth, Tilray printed a double bottom pattern at the $4.81 level on March 14 and March 15 and surged up 31.8% higher to reach a high of $6.30 on Wednesday.