CRZ Stock: This Marijuana Stock Is Poised for Further Gains
2018 has not been kind to the marijuana stock sector, as an abundance of selling pressure has left this sector battered and bruised. In all honesty, after the incredible run-up that occurred in 2017, a correction in 2018 should have been expected.
I am not going to focus on the negative, because nobody really wants to hear it. Instead, I am going to focus on an intriguing stock within the sector that is bucking the trend and, better yet, is poised for further gains.
I am sure this is the type of positive news that marijuana investors would prefer to hear.
The company in question is CannaRoyalty Corp (OTCMKTS:CNNRF, CNSX:CRZ). On April 13, it completed a particularly powerful price pattern, which is strongly suggesting that higher CannaRoyalty stock prices are likely to follow.
This particularly powerful price pattern is highlighted on the following CRZ stock chart.
Chart courtesy of StockCharts.com
The completed technical price pattern highlighted on the CannaRoyalty stock chart is a symmetrical triangle pattern.
Symmetrical triangle patterns develop when the price action is characterized by a series of lower highs and higher lows. Identifying these patterns is simply accomplished by connecting the series of higher lows and lower highs using two trend lines.
These trend lines act as levels of price support and price resistance, and this price pattern is resolved when one of these trend lines is broken.
You will notice that the trend lines are converging; this phenomenon illustrates that, as the pattern develops, the range between support and resistance begins to contract. This contraction of space causes energy to build within this pattern, which is why triangle patterns are particularity powerful.
The source of this energy is created by traders positioning themselves on either side of support and resistance in anticipation of a possible resolution. Only when the stock price exits the pattern will this pattern finally be resolved, and the energy be released.
The direction that the stock breaks out of the pattern is the direction it is likely to follow.
On April 13, CannaRoyalty stock exited the symmetrical triangle by breaking out above resistance. This event is marked as a breakout on the CRZ stock chart and, as implied, higher prices have prevailed.
This notion of higher prices and further gains is being supported by the technical indications highlighted on the following CannaRoyalty stock chart.
Chart courtesy of StockCharts.com
This CRZ stock chart illustrates that, since June 2016, CannaRoyalty stock has been creating a series of higher highs and higher lows. This price action has created a price pattern resembling a staircase.
The higher highs and higher lows used to create this staircase pattern are the quintessential characteristics that define a bullish trend.
This bullish trend was captured using the simple uptrend line, which was created by connecting the series of higher lows that characterized the trend.
This uptrend line acts as a very important level of price support. Since its inception, it has been tested three times. Each time, CannaRoyalty stock has bounced right off of this level in impressive fashion. The inability to trade below the uptrend line is a testament to its significance, which is difficult to refute.
I am going to assume that, as long as CRZ stock trades above the uptrend line, its bull market will remain in development. This assumption of a bull market being in development will only be negated if CRZ stock breaks below this uptrend line.
The symmetrical triangle was created and completed above this uptrend line. This completed pattern reinforces the notion that the trend toward higher stock prices is likely to continue.
This idea of higher CRZ stock prices has also just been reinforced by the moving average convergence/divergence (MACD) indicator.
MACD is a simple yet effective indicator that uses the crossing of a signal line to distinguish whether bullish or bearish momentum is influencing the price action in a stock.
Bullish momentum implies that a stock is likely to advance, while bearish momentum implies that a stock is likely to decline.
Momentum is a powerful force, and a stock cannot sustain a move in either direction unless the applicable momentum is supporting it.
This is why the bullish MACD signal that was just generated shortly after CRZ stock exited the symmetrical triangle both implies and reinforces the notion that a move toward higher CannaRoyalty stock prices is likely to continue.
I am bullish on CannaRoyalty stock because the price action on its stock chart suggests that such a view is warranted.
I will continue to carry this bullish view as long as CRZ stock continues to trade above its uptrend line, which has been supporting its move toward higher stock prices.