Cannabis Stock: Expecting Further Gains in MedReleaf Stock

Cannabis stock
Credit: iStock.com/Peshkova

MEDFF Stock: Anticipating Further Gains

Marijuana stocks have caught a speculative tailwind that is currently pushing the entire sector higher. The performance in this sector is being magnified by the exemplary performance of the equity markets, and it is never wise to bet against the tape. That is why I believe there are further gains in store for this sector.

I am focusing on MedReleaf Corp (OTCMKTS: MEDFF, TSE: LEAF) stock because I have the inclination to believe that higher MedReleaf stock prices are on the horizon. These beliefs are centered around the technical indications that have been generated using the MEDFF stock chart.

Using indications generated on a company’s stock chart in order to generate a view on an investment is a method of investment analysis called technical analysis. This method is predicated on the notion that historical data can be used to forecast what the future may bring. I have spent almost two decades studying and applying this method. As a result, I feel I am well-equipped to tackle the task of analyzing the MEDFF stock chart.

I have been bullish on MedReleaf stock since October 13, because the price action that has been supporting the advance toward higher prices has been constructive in nature.

The following MedReleaf stock chart illustrates the constructive price action responsible for the advancement of the stock price.

MedReleaf stock chart

Chart courtesy of StockCharts.com

Constructive price action is an alternating wave structure consisting of impulse waves and consolidation waves. These waves are responsible for creating the bullish trend on the MEDFF stock chart.

The impulse waves are highlighted in green and they capture the period in a bullish trend when the stock price makes an abrupt and aggressive move toward higher stock prices.

Also ReadTop Marijuana Stocks: Should You Invest in Medicinal or Recreational Marijuana Stocks?

The consolidation waves are highlighted in purple and they capture the period in a bullish trend when the stock prices stage a correction. A price correction alleviates any overbought conditions, which sets up the necessary environment where an advancing impulse wave can thrive.

These waves work together in order to create and sustain a bullish trend, and therefore, as long as the price action remains constructive, higher MEDFF stock prices are likely to prevail.

This bullish view is being reinforced by the technical indications highlighted on the following MedReleaf stock chart.

MedReleaf price chart

Chart courtesy of StockCharts.com

The focus of this price chart is the relative strength indicator (RSI), and the moving average convergence/divergence (MACD) indicator. Both of these indications are located in the lower panel of the stock chart.

The relative strength indicator is an oscillator used to determine whether a stock is overbought or oversold. An RSI reading above 70 is an overbought indication, while an RSI reading below 30 is an oversold indication. There are a number of ways to use this oscillator, and in this case, I am using it to confirm the bullish advance that is currently in development.

Every time MEDFF stock created a new high, the RSI went on to create a higher high. This suggests that the bullish advance is strong and well-supported, with little to suggest that the trend is weakening in any way. As a result, it is likely that new highs are on the horizon and the timing of these new highs is likely to coincide with a bullish MACD signal.

MACD is a momentum indicator that uses the crossing of a signal line in order to determine whether bullish or bearish momentum is influencing the price action in a stock. This indication is influential because a bullish advance cannot occur without bullish momentum.

The MACD signal lines are currently converging and a bullish indication can be generated in the days ahead. Once this indication is generated, it will imply that the path of least resistance is geared toward higher prices, which increases the likelihood that MedReleaf stock will appreciate.

Analyst Take:

The indications on the MedReleaf stock chart continue to support the notion that the bull market in MEDFF stock is in development and, therefore, higher prices should come as no surprise.