CannaRoyalty Stock Breaks Out, Implying That Higher Prices Will Follow

CannaRoyalty-stock
iStock.com/max_carpenter

CRZ Stock: The Next Leg Toward Higher Prices Has Begun

On August 15, Constellation Brands, Inc. (NYSE:STZ) announced that it was increasing its stake in Canopy Growth Corp (NYSE:CGC). The news sent shock waves within the marijuana stock sector, causing investors to bid up marijuana stocks.

I am returning to focus on CannaRoyalty Corp (OTCMKTS:CNNRF, CNSX:CRZ) because the breaking news released on August 15 continues to resonate. As a result, CRZ stock has completed a technical price pattern that is now suggesting that higher CannaRoyalty stock prices are on the horizon.

The pattern in question is the same price pattern that I highlighted on August 24, 2018, in a publication titled “Is CannaRoyalty Stock Destined to Break Out Toward Higher Prices?

This question has been answered, and the completed price pattern is highlighted on the following stock chart.

Advertisement

Chart courtesy of StockCharts.com

The technical price pattern highlighted on this CannaRoyalty stock chart is an ascending triangle.

Ascending triangles are very special price patterns that develop when the price action is characterized by a static high and a series of higher lows.

Identifying and capturing this price pattern is achieved by connecting the peaks and troughs produced by the price action. The end result is two converging trend lines that depict a triangle price pattern and pinpoint where price support and resistance reside.

These trend lines provide very pertinent information because in order to complete the ascending triangle, CRZ stock needed to either break above price resistance or break below price support.

On August 27, CannaRoyalty stock broke above price resistance, which resided at $5.75, completing the price pattern. This breakout was accompanied by a spike in volume, which reaffirms the implications suggested by the completed price pattern that higher CRZ stock prices are now likely to follow.

The completed price pattern also doubles as a consolidation wave. Its implications are captured on the following CRZ stock chart.

Chart courtesy of StockCharts.com

This CRZ stock chart captures a wave structure that is responsible for creating and sustaining a bullish trend.

This bullish trend has taken the CannaRoyalty stock price from a low of $1.50 to where it currently resides at $6.25, representing a 316.67% return since June 2017.

This incredible return was constructed using impulse waves and consolidation waves.

Impulse waves capture the period in a bullish trend when a stock makes a progressive move toward higher prices. This wave is highlighted in green on the chart above.

Consolidation waves capture the period in a bullish trend when a stock corrects and refrains from advancing. This wave is highlighted in purple on the chart above.

Consolidation waves are very important in the development of a bullish trend because they create the necessary conditions so an advancing impulse wave can follow.

Speaking of consolidation waves, the completed ascending triangle also doubles as a consolidation wave. Its completion is now suggesting that a new impulse wave is now in development.

This suggested move toward higher prices is being reinforced by the moving average convergence/divergence (MACD) indicator, which is captured in the lower panel of the above stock chart.

MACD is an influential momentum indicator that uses the crossing of a signal line to determine whether bullish or bearish momentum is influencing the price action in a stock.

Bullish momentum implies that a stock is geared toward higher prices. Bearish momentum implies that a stock is geared toward lower prices.

This is why the waves within the wave structure have coincided with the MACD indicator; a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it.

Analyst Take

I am bullish on CannaRoyalty stock because a completed price pattern, a bullish wave structure, and a momentum indicator are all suggesting that CRZ stock is poised for further gains.

Because my bullish view was generated using technical analysis, I will maintain this view until there are technical indications suggesting that a bullish view is no longer warranted.