Aurora Cannabis Breaks Out, Setting the Stage for a Move Toward $10

Aurora Cannabis Stock
iStock.com/Pattanaphong Khuankaew

ACBFF Stock: A Powerful Price Pattern Is Complete

It brings me great delight to be focusing on Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) once again. This licensed marijuana producer that operates in Canada is building an 800,000-square-foot facility called “Aurora Sky” which is adjacent to Edmonton International Airport, making the growth prospects for this company very compelling.

I wish I could say that this is what’s driving my enthusiasm for the stock, but it is not. My enthusiasm for this investment is actually based on the powerful technical price pattern that has been painted on the ACBFF stock chart.

I originally outlined this technical price pattern on October 5, in a publication titled “Aurora Cannabis Stock Is Setting Up for an Explosive Move,” and I am returning to provide an update because the technical price pattern is now complete, which is suggesting that a move toward higher ACBFF stock prices is now in development.

The following Aurora Cannabis stock chart illustrates the technical price pattern that has brought me much excitement.

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ACBFF stock chart

Chart courtesy of StockCharts.com

The technical price pattern that is painted on the ACBFF stock chart is a symmetrical triangle. These patterns are identified by using two converging trend lines; the upper trend line acts as a level of price resistance, while the lower trend line acts as a level of price support.

These patterns are particularity powerful because, as they develop, they build and store energy within the pattern. In essence, a symmetrical triangle acts like a coiled spring and the energy stored within it is finally released when the pattern is resolved when the stock price either breaks above resistance or falls below support.

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The size and scope of the pattern is directly related to the reaction that can be expected once the pattern is resolved. Larger and longer patterns are expected to produce exceptional moves, and the pattern that is painted on the Aurora Cannabis stock chart took 12 months to create, meaning a sizable move is expected once the pattern is resolved.

The good news that I have to share, and the reason why I wrote this publication, is that the symmetrical triangle has finally been resolved. This momentous feat occurred on October 30, after an initial failed attempt. This is suggesting that much higher stock prices are now in development.

This symmetrical triangle is actually part of a much larger wave structure, which is highlighted on the following Aurora Cannabis stock chart.

Chart courtesy of StockCharts.com

The wave structure that is highlighted on the above ACBFF stock chart is called constructive price action. Constructive price action builds the foundation that creates and sustains a trend. It consists of an alternating two-wave structure made up of impulse waves and consolidation waves.

The impulse waves, which are highlighted in green, define the stage in a bullish trend when the stock price stages a progressive move toward higher prices.

The consolidation waves, which are highlighted in purple, define the stage in a bullish trend when the stock price corrects and pulls back from its highs. This correction is necessary in order to alleviate any overbought conditions that were created during the impulse wave that preceded it. Alleviating overbought conditions creates the necessary environment where a new impulse wave can develop.

The symmetrical triangle defines the type of consolidation wave that was in development, and the completion of the pattern also suggests that the consolidation wave is complete. A completed consolidation wave implies that a new impulse wave is now in development, and that higher ACBFF stock prices are on the horizon.

The great thing about this wave structure is, not only does it suggest that higher stock prices are on the horizon, it can be used to generate a potential price objective.

This price objective is based on the theory of impulse waves, which states that impulse waves that are separated by a consolidation wave tend to mirror each other in terms of height. If I apply this theory to the wave structure on the stock chart, it produces a $3.80 price objective.

This objective is based on a linear move, but I have the inclination to believe that the height of the next move in Aurora Cannabis stock will be log-based. So, under that assumption, the price objective then becomes within the range of $10.00 and $12.00.

Analyst Take:

I am bullish on Aurora because it has just completed a technical price pattern that is suggesting that higher prices are now in development. I have reason to believe, based on the wave structure on the company’s stock chart, that ACBFF stock could trade as high as $10.00 in the months ahead.