ACBFF Stock: The Completion of This Technical Price Pattern Will Determine What Follows
Writing about investments in this market environment has been a fruitful endeavor. The market seems to only venture in one direction, the indices continue to forge new highs, and daily advances are becoming the norm. One would assume that all investments are on the move, but that is not always the case.
At the moment, I am watching Aurora Cannabis Inc. (OTCMKTS:ACBFF, TSE:ACB) for a very particular reason.
Aurora Cannabis Inc. is a Canadian licensed marijuana producer, and ACBFF stock really stands to benefit now that the Canadian government has made strides to create a recreational market for its product.
As a result, Aurora Cannabis stock—and this entire sector—has caught a bid, and speculation is beginning to ramp up once again. This is creating a tailwind that’s driving the investments within this space.
The bullish tailwind created by speculative money flowing into this sector is a plus, but it is not the actual reason why I’m watching this stock. My interest in this investment has been piqued because there is a particularly powerful technical price pattern that is in development on the ACBFF stock chart.
If you have frequented my previous works, you already know that I generate my views on an investment by analyzing the company’s stock chart. This method of investment analysis is called technical analysis, and I have spent nearly 20 years dedicating myself to this craft. If you’re wondering why, the answer is pretty simple. When this method of investment analysis is applied correctly, the results are simply remarkable.
The following Aurora Cannabis stock chart illustrates the powerful technical price pattern that is currently in development.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the chart is a symmetrical triangle.
This pattern is established as a result of the price action that produces a series of lower highs and higher lows. This pattern is best identified by using two converging trend lines, which are created by connecting the series of lower highs and the series of higher lows.
These trend lines define levels of price support and price resistance. This pattern is resolved when the stock price breaks above resistance or below support.
Symmetrical triangles are particularly powerful technical price patterns because, as they develop, momentum is stored within the pattern. The confinement of space caused by the converging levels of price support and price resistance acts like a coiled spring of stored momentum. This momentum is released once the pattern is resolved.
The size and scope of the pattern is directly related to size of the reaction that can be expected once the pattern is resolved. This pattern is almost one year in the making and, therefore, quite a large reaction is expected to occur once ACBFF stock breaks above resistance or below support.
At the moment, resistance outlined by the symmetrical triangle is being tested. This move off support has been well supported, which increases the odds that this pattern will be resolved in a bullish manner.
The following Aurora Cannabis Stock chart illustrates this well supported move off support.
Chart courtesy of StockCharts.com
This stock chart illustrates the bullish move, which contains the quintessential characteristic that defines all bullish trends, which is a series of higher highs and higher lows.
This bullish trend is best captured by using a simple uptrend line, which is created by connecting the series of higher lows. Using this trend line as a tool is just as simple as it was to create.
As long as ACBFF stock is trading above the uptrend line, I can only presume that higher prices are expected to follow. If the stock price falls below the uptrend line, I can only assume that a larger correction is set to ensue.
In essence, this trend line is acting as a level of price support, and, while the stock is trading above this trend line, I will have the inclination to believe that the symmetrical triangle currently in development is favoring a bullish outcome.
If the symmetrical triangle is resolved in a bullish manner, I will expect much higher stock prices to follow. The initial objective would be the previous all-time high of $2.41, followed by much higher prices.
A particularly explosive technical price pattern is currently in development on the Aurora Cannabis stock chart. A bullish resolution of this pattern would imply that much higher stock prices are on the horizon. The current market environment favors a bullish outcome, so I will be waiting for a break above resistance outlined by the pattern to confirm that a move toward higher stock prices is in development.