Marijuana Stock: Canopy Growth Stock is on the Verge of its Next Advance

Canopy Growth Stock
Credit: iStock.com/CherriesJD

TWMJF Stock: These Indicators Will Determine What happens Next

Developments on the Canopy Growth Corp (OTCMKTS: TWMJF, TSE: WEED) growth stock chart continue to suggest that TWMJ stock is setting up to make its next move. I am currently watching a technical price pattern and an influential momentum indicator that will help determine when Canopy Growth stock is going to make this move.

Using patterns and indicators in order to base a view on an investment is called “technical analysis.” This method of investment analysis presumes that the price of an investment moves in trends, and therefore price and volume data found on the companies stock chart can be used to speculate on what the future may bring.

For instance, since June of this year, after the share price bottomed at $4.90, the price action on the Canopy Growth stock chart has been constructive in nature. This constructive price action has been supporting the advancement in TWMJF stock, and is it currently up 212.04% from those lows created earlier this year.

The constructive price action I am referring to is illustrated on the following Canopy Growth stock chart:

Canopy Growth stock chart

Chart courtesy of StockCharts.com

This TWMJF stock chart has been annotated in order to highlight the waves that are responsible for creating constructive price action.

The waves highlighted in green are impulse waves, and they are responsible for creating and capturing the stage in a bullish trend, where the stock advances towards higher prices.

The waves highlighted in purple are consolidation waves, and they are characterized by corrective price action. This action is responsible for unwinding any overbought condition that was created during the advancement in price that preceded it. This is a necessary step that is required in order to set up the necessary conditions for a new advancing impulse waves to follow.

These waves work together in an alternating fashion in order to create the necessary building blocks where a bullish trend can sustain itself and flourish.

The bullish trend created by constructive price action is why I have the inclination to believe that further gains are on the horizon. But in order to confirm these beliefs about TWMJF stock, I require confirming indications.

The following Canopy Growth stock chart illustrates the indications that I am currently watching that will reaffirm and confirm my bullish beliefs:

Canopy Growth price chart

Chart courtesy of StockCharts.com

As I mentioned earlier, I am watching a technical price pattern, and a key momentum indicator that will determine when Canopy Growth stock is set to make its next move.

The technical price pattern highlighted on the TWMJF stock chart is a symmetrical triangle. This pattern is identified using two converging trend lines, which are created by connecting the series of lower highs and higher lows that characterize this pattern. These trend lines define levels of prices support and price resistance.

Triangle patterns are very powerful patterns because the confinement of space created by the converging levels of price support and prices resistance causes energy to build within the pattern. This energy is finally released when the stock price either breaks above resistance or falls below support.

A bullish resolution of this pattern will imply that higher prices are in development, and because this pattern doubles as a consolidation wave, it will also imply that a new impulse wave is in development. Such an event will most likely coincide with a bullish moving average convergence/divergence (MACD) signal.

MACD is a momentum indicator that is used to distinguish whether bullish or bearish momentum is influencing the price action in a stock. This indicator is located in the lower panel of the stock chart, and it uses the crossing of a signal line in to distinguish between these two polar opposites.

The MACD indicator is a very important indicator because in order for a stock to make sustained move towards higher prices, bullish momentum is required.

A completed triangle pattern and a bullish MACD cross would confirm my beliefs that a move towards higher TWMJF stock prices is in development.

Analysts Take:

I have the inclination to believe that a move towards higher TWMJF stock prices is on the horizon. In order to confirm these beliefs, I am watching for the completion of a symmetrical triangle, and a bullish MACD cross. These coinciding indications would suggest that the next leg towards higher Canopy Growth stock prices has begun.