Cannabis Stock: The Sky Is the Limit for MedReleaf (OTCMKTS:MEDFF)

MEDFF Stock
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MEDFF Stock: This Investment’s Character Continues to Support Higher Stock Prices

Marijuana stocks have once again caught a bid, and the repercussions are widespread for this sector. I am focusing on one of the largest cannabis producers in Canada, MedReleaf Corp (OTCMKTS: MEDFF) (TSE: LEAF) stock because I find the MedReleaf stock chart compelling. It contains characteristics indicative of a bullish trend in development.

The fundamental backdrop also supports the notion of higher stock prices. The Canadian government is setting the groundwork to create a recreational market for cannabis to begin in July 2018. This will allow MedReleaf to expand its consumer base beyond its current medical marijuana patients.

Demand from the recreational market is anticipated to be high and MedReleaf will stand to benefit from it. Investors are anticipating the repercussions of a recreational market and they have already begun to bid up MEDFF stock.

My forte is analyzing a company’s stock chart and this is the primary reason why I am focusing on MEDFF stock. This method of investment analysis is called technical analysis and it is my preferred method of analyzing an investment. The reason why I prefer this method over fundamental analysis is that it creates timely indications, which are extremely valuable when creating a trading strategy. Let’s not leave out the most important detail regarding technical analysis, which is that when this method of investment analysis is applied correctly, the results are outstanding.

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The reason why I prefer this method over fundamental analysis is that it creates timely indications, which are extremely valuable when creating a trading strategy. Let’s not leave out the most important detail regarding technical analysis, which is that when this method of investment analysis is applied correctly, the results are outstanding.

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The following stock chart illustrates the technical developments on the company’s stock chart responsible for piquing my interest in this investment.

MedReleaf stock chart

Chart courtesy of StockCharts.com

This stock chart illustrates a special dynamic that was created when MedReleaf stock broke above its previous all-time high.

This previous all-time high highlighted on the stock chart was created a short few days after this company’s initial public offering (IPO), where the share price reached a high of $7.23. This price point contained the stock from advancing for almost three months until that fateful day in September when MedReleaf stock was finally able to break above this level of price resistance. This feat set the stage for a bullish run towards higher prices that is currently still in development.

Breaking above a previous all-time high that was set shortly after it began trading publicly is a characteristic that MedReleaf stock shares with a handful of exceptional companies. Facebook Inc (NASDAQ: FB), Alibaba Group Holding Ltd (NYSE: BABA), and Shopify Inc (NYSE: SHOP) are a few popular names that have exhibited similar characteristics, and they have all performed extremely well.

The price action responsible for breaking above the previous all-time high has been constructive in nature, which is indicative of a bullish trend in development.

The following MEDFF stock chart illustrates the constructive price action that has defined this bullish advance towards higher stock prices.

MEDFF stock chart

Chart courtesy of StockCharts.com

This stock chart captures the constructive price action that is responsible for creating the quintessential characteristic that defines all bullish trends, which is a sequence of higher highs and higher lows.

This sequence is created using constructive price action, which consists of two distinct waves, an impulse wave, and a consolidation wave.

The impulse waves are highlighted in green, and these waves define the stage in a bullish trend where the stock price makes a move towards higher stock prices. To simplify things, just think of the impulse waves as taking two steps forward.

The consolation waves are highlighted in purple, and these waves define the stage in a bullish trend where overbought condition from the previous impulse waves are alleviated, in order to set up the next advancing impulse wave. To simplify things, think of consolidation wave as taking one step back.

Taking two steps forward and one step back creates a progressive advancement towards higher stock prices, and it is why this alternating wave structure is responsible for creating and sustaining a move towards higher stock prices. As long as the wave structure continues to advance using constructive price action, I can only assume that the trend towards higher stock prices is set to continue.

Analyst Take: 

I am bullish on MedReleaf stock because the company’s stock chart contains a number of characteristics that continue to suggest that higher MEDFF stock prices are on the horizon. I will continue to hold a bullish basis on this investment until there are characteristics on the company’s stock chart that suggest another bias is warranted.