By Gary Christie
Using Trading Central’s Technical Event® screener, our analyst Gary Christie, searched Canopy Growth Corp (CGC) stocks to find an ascending continuation triangle.
Canada is set to be the second developed country to legalize recreational Cannabis. Canopy Growth Corp (CGC) has the largest square footage available to cultivate pot amongst its rivals. Canopy Growth CEO Bruce Linton predicted that there would be "no chance" licensed cannabis producers would meet consumer demand on the first day of legalization. He speculated that supply and demand wouldn't equalize until 2019 and 2020 as existing companies increase production and new companies are approved.
Recognia’s pattern recognition identified an ascending continuation triangle on Canopy Growth Corp (CGC). The increasingly higher lows and constant highs within this pattern tell us that buyers are more aggressive than sellers, confirmed by a breakout through a resistance level to signal a continuation of the prior uptrend.
An Ascending Triangle, with its increasingly higher lows and constant highs, indicates that buyers are more aggressive than sellers. The pattern typically forms because a supply of shares is available at a certain price, represented by the upper flat line. When the supply depletes, the shares quickly break out from the top trend line and move higher.
Upward momentum has just built up with the latest price now trading higher than the price 10 bars ago. Momentum measures the velocity of price changes. For a 10-bar momentum, we take the difference between the last bar's close and the close 10 bars ago and we plot this as a line fluctuating above and below 0 which can be used as buy and sell signals when in agreement with prevailing trend analysis. Momentum is significant because it signals the strength of price trends. A healthy price trend tends to exhibit strong momentum, while weakening trends often have decreasing momentum indicating a trend reversal or correction.
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