MGW Stock: This Sector Is Red Hot, and It Is Cooking Up Higher Stock Prices
Today’s focus is on Maple Leaf Green World Inc (OTCMKTS:MGWFF, CVE:MGW) stock because it is a very interesting play involving a very hot sector.
Marijuana stocks have caught quite a significant bid in recent weeks, stemming from the news that Constellation Brands, Inc. (NYSE:STZ), a major player in the beer, wine, and spirits segment, had bought a significant stake in Canopy Growth Corp (OTCMKTS:TWMJF, TSE:WEED) stock. This news has spurred speculation that other companies will follow suit and it has caused MGW stock, and others like it, to appreciate.
I am focusing on Maple Leaf Green World stock for a particular reason. The speculation that has been fueling the frenzy in this sector has resulted in a completed technical price pattern on the company’s stock chart, which is now suggesting that higher MGW stock prices are on the horizon.
The Completed Technical Price Pattern
The following Maple Leaf Green World stock chart illustrates this completed technical price pattern.
Chart courtesy of StockCharts.com
The pattern highlighted on the MGW stock chart is a descending channel. This pattern is characterized by an orderly series of lower highs and lower lows, which also defines a bearish trend.
This pattern is best captured by using two parallel trend lines that are created by connecting the respective levels of lower highs and lower lows. These trend lines not only define this pattern, but they also act like levels of price resistance and price support, respectively.
Using these trend lines is quite simple and, as long as the price action is contained within them, the bearish trend is still intact and lower prices are likely to prevail.
On November 13, Maple Leaf Green World stock broke above the trend line representing resistance. This feat suggested that the bearish trend that began on October 6, 2016, has concluded and that, therefore, the stock price is free to appreciate.
This view of an appreciating stock price is being reinforced by the golden cross now being generated. A golden cross is a popular technical indicator used to suggest that a bull market is in development. This bullish signal is created when the faster 50-day moving average crosses above the slower 200-day moving average.
The significance of this indicator should not be dismissed, because in May of this year, when a death cross was generated, it correctly confirmed the notion that lower prices were on the horizon; MGW stock went on to drop by 40.2% before it was finally able to find its footing.
The completed technical price pattern and the golden cross are coinciding indications suggesting that higher MGW stock prices are now in development. When this is applied to the price action on the long-term Maple Leaf Green World stock chart, it suggests that a significant move is in development, and that new highs are likely to be attained.
The Big Picture
The following Maple Leaf Green World stock chart illustrates the wave structure that has been responsible for creating and sustaining the bullish trend in this stock since September 2015.
Chart courtesy of StockCharts.com
Constructive price action consists of two waves: an impulse wave and a consolidation wave. This MGW stock chart has been annotated in order to highlight this wave structure.
The waves highlighted in green are impulse waves and they capture the period in a bullish trend when the stock price makes a move toward higher prices.
The waves highlighted in purple are consolidation waves, which capture the period in a bullish trend when the stock price stages a correction. These corrections in price are necessary to alleviate any overbought conditions that were created in the preceding advance. This sets the stage so a new advancing impulse wave can develop.
These waves are dependent on one another and they work in an alternating fashion to create and sustain a trend.
The descending channel is a consolidation wave, and now that it is complete, it suggests that a new advancing impulse wave is in development.
The previous impulse waves have all gone on to forge new highs within this bullish trend, and I have no reason to believe that this time will be any different. So, as a result, I foresee a move toward higher prices that will take Maple Leaf Green World Stock beyond its previous high of $0.99.
I believe that higher Maple Leaf Green World stock prices are on the horizon because a number of developments on the company’s stock chart suggest that higher prices are the path of least resistance. As a result, I will maintain a bullish view on MGW stock until there are developments on the company’s stock chart that suggest another view is warranted.