Marijuana Stocks: Emblem Stock Needs to Break Above This Level

 Emblem stock
credits:istock.com/phongphan5922

EMMBF Stock: Anticipating a Move Toward Higher Prices

It is not a secret that marijuana stocks have been performing extremely well. It is causing many investors to flock toward this sector, looking for the next stock primed to make a move.

I am focusing on Emblem Corp (OTCMKTS:EMMBF, CVE:EMC) stock because it has been lagging behind the pack, so it has either become a value play, and therefore it has some catching up to do, or something more ominous is in the works.

I am leaning towards the optimistic side, but to confirm that Emblem stock is making a move toward higher stock prices, I need EMMBF stock to put in some legwork to change the bearish trend that has been painted on its stock chart.

For those not familiar with what I am referring to, I use the company’s stock chart to determine whether or not the stock price is set to appreciate or depreciate. This method of investment analysis is called technical analysis and it relies on historical volume and price data to determine the direction the stock is heading in, which can help shed some light on what the future may bring.

The following Emblem stock chart illustrates the bearish trend that has been dominating the trading action.

Emblem Corp stock

Chart courtesy of StockCharts.com

This stock chart illustrates the predominant trend. This trend has been characterized by a series of lower lows and lower highs, which is the quintessential characteristic that defines a bearish trend.

This bearish trend was confirmed in February when the moving average convergence/divergence (MACD) indicator generated a bearish cross.

MACD is a momentum indicator used to determine whether bullish or bearish momentum is influencing the price action in a stock. This information is extremely important because, in order for a stock to make a sustained move toward higher or lower prices, the applicable momentum is required.

After the bearish cross was generated, Emblem stock went on to lose an additional 41.86% of its value until it was finally able to find its footing at the $1.50 mark. The stock price has been hovering at this level and a bullish MACD cross was generated in September.

This indication is suggesting that bullish moment is currently influencing the Emblem stock price, and therefore, it is currently geared toward higher prices. This can mark the beginning of a new bullish trend or it can just mark a pause within a larger bearish trend.

In order to determine what happens next, I need the stock to break above a certain level of price resistance.

This level of price resistance is illustrated on the following Emblem stock chart.

Emblem Corp stock

Chart courtesy of StockCharts.com

This Emblem price chart has been annotated to highlight a technical price pattern and a key indicator.

The technical price pattern is a sideways channel and it is defined by its price action, in which the share price is bound by a consistent level of price support and resistance. This pattern is easily captured using two parallel trend lines that represent these levels of price support and resistance.

In order to suggest a trend reversal has occurred, Emblem stock needs to break above resistance, which currently resides at $2.10. This price point is very influential because it currently coincides with the 200-day moving average.

The 200-day moving average is a key indicator because it acts as a dividing line that separates bullish stocks from bearish ones. The distinction between these two polar opposites is as easy at determining which side of the 200-day moving average the stock is trading on. If it is trading above the 200-day moving average, the stock is labeled as bullish. If it is trading below it, the stock is labeled as bearish.

In order to reverse the bearish trend and suggest that a new bullish advance has begun, EMC stock needs to close above these coinciding levels of resistance. Given the current market conditions and the bullish MACD indication, such a feat is plausible, and therefore something to watch for.

Analyst Take:

Emblem stock has been lagging behind its peers, which raises the question: Has an opportunity presented itself?

In order to even suggest that the stock is setting the stage for a move toward higher prices, it must close above a very influential level of resistance, which currently resides at $2.10. I am patiently waiting for such an outcome.