Aurora Cannabis Stock Is Setting the Stage for Higher Prices

Aurora Cannbis stock
credits:istock.com/MaYcaL

ACBFF Stock: Setting Its Sights on Further Gains

Marijuana stocks are set to end the year on a high note and it favors further gains in 2018. I am focusing on Aurora Cannabis Inc (OTCMKTS: ACBFF) (TSE: ACB) stock because I want to reiterate my bullish stance on ACBFF stock and outline the indications I am currently watching, which I will be using to suggest that another advance in Aurora Cannabis stock is on the horizon.

I first became bullish on Aurora Cannabis stock when the completion of a technical price pattern suggested that higher prices were likely to follow. This pattern is highlighted on the following stock chart.

Aurora Cannabis Stock Chart

Chart courtesy of StockCharts.com

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The technical price pattern responsible for initiating my bullish view on ACBFF stock is a symmetrical triangle. This pattern is highlighted on the stock chart above and is characterized by price action that consists of higher lows and lower highs. Capturing this pattern is accomplished by using two converging trend lines, where the upper trend line acts as a level of resistance and the lower trend line acts as a level of support.

I am quite enamored with symmetrical triangle patterns because they are particularly powerful. As the triangle develops, it has the ability to build and store energy. This stored energy is released when price either breaks above resistance or falls below support.

On October 30, the triangle pattern was resolved via a breakout and the Aurora Cannabis stock price appreciated rapidly, tacking on 194.42% in short order. I have reason to believe that higher prices are still likely because this symmetrical triangle is actually part of a much larger wave structure, which is highlighted on the following stock chart.

Aurora Cannabis stock chart

Chart courtesy of StockCharts.com

The wave structure highlighted on the ACBFF stock chart above is called constructive price action. Constructive price action consists of an alternating two-wave structure that contains a series of impulse waves and consolidation waves.

The impulse waves, which are highlighted in green, define the stage in a bullish trend where the stock price stages a sustained and resilient 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 refrains from advancing. This corrective price action is necessary in order to alleviate the overbought conditions that were created during the impulse wave that preceded it. Alleviating an overbought condition creates the necessary environment where a new advancing impulse wave can manifest.

These waves work in an alternating fashion to create and sustain a bullish trend.

The symmetrical triangle doubles as a consolidation wave and its completion implies that a new impulse wave is in development, where higher ACBFF stock prices can be expected.

I outlined the repercussions of this wave structure in a publication titled “Aurora Cannabis Breaks Out, Setting the Stage for a Move Toward $10” and it explains how I used this wave structure to suggest that $10.00 was a plausible price objective.

The stock price has not reached this level yet but the indications on the following Aurora Cannabis stock chart are suggesting that such a move is on the horizon.

ACBFF Stock Chart

Chart courtesy of StockCharts.com

This stock chart illustrates a symmetrical triangle. This pattern is like the one that was highlighted earlier but on a much smaller scale. Its completion implies that higher prices are now in development.

In order to confirm this notion of higher prices, I am currently watching the moving average convergence/divergence (MACD) indicator highlighted in the lower panel.

MACD is a momentum indicator that determines whether bullish or bearish momentum is influencing the trading action in a stock. This indication is very influential because a stock cannot make a move toward higher prices without bullish momentum influencing it. This indicator is currently in bearish alignment. In order to confirm the notion that higher prices are in development as suggested by the symmetrical triangle, a bullish MACD cross is needed.

Once this signal is generated, it increases the odds that my target of $10.00 will be obtained.

Analyst Take:

My bullish views toward Aurora Cannabis stock have not changed. I still believe that $10.00 is a possible price objective and the indications are lining up to suggest that such an outcome is plausible. As a result, I will remain bullish until my objective is met or there are indications suggesting another view on ACBFF stock is warranted.