MEDFF Stock: A Resolution Is Days, if not Hours Away
The marijuana stock sector is currently within the grips of a correction, but lower prices have done little to sway the enthusiasm for this sector as the investors who hunger for this sector remain unsatiated as they continue to enter this sector in droves.
The catalyst fueling their demand and lust for this sector is that marijuana is set to become legal in Canada on a federal level in July, which will set precedence for the entire world. The retail investing community is pretty adamant that this date will act as a catalyst, which is something we both agree upon, but whether this even turns out to be a bullish or bearish catalyst is something we may not see eye-to-eye on.
Last year, when the Canadian government outlined its framework for legalization and those details were made public, the sector sold off.
That event proved to be a “buy on rumor, sell on news” event, which raises the question, “Will this time be any different?” Perhaps it will or perhaps it won’t, but either way, I will continue to take my cues from the indications that are produced on a company’s stock charts.
Which brings me to MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF). I am focusing on MedReleaf stock because there is something currently brewing within this investment. I can’t put my finger on it exactly, but my suspicions are being piqued by the price action that is currently being generated on the MEDFF stock chart.
This compelling price action is highlighted on the following MedReleaf stock chart.
Chart courtesy of StockCharts.com
This MEDFF stock chart illustrates that, since February 14, a technical price pattern known as a descending triangle has been in development.
Descending triangle patterns develop when the price action is characterized by price action that contains a series of lower highs and a static low. Connecting this series of price points creates two converging trend lines that define respective levels of price support and price resistance.
The convergence between price support and price resistance is why triangle patterns, in particular, are very powerful. This is why I have no problem in saying these patterns are among my favorites.
The power generated by a triangle pattern is a result of traders positioning themselves on either side of support and resistance in anticipation of a resolution of this pattern. The longer this pattern is in development, the more powerful the reaction that follows.
The technical price pattern on the MedReleaf stock chart is going to be resolved very shortly, because the range between support and resistance is going to meet soon. If I had to speculate, I would say that a resolution to this descending triangle is days, if not hours, away.
A break above resistance will imply that higher MEDFF stock prices are likely to prevail, while a break below support will imply that lower MEDFF stock prices are likely to prevail.
This pattern is why I currently believe that something is brewing in MedReleaf stock. The price action has been pristine and precise, and I firmly believe that the next move in MedReleaf stock will be determined based on the direction in which the descending channel is going to be resolved.
There is a technical price pattern currently in development on the MedReleaf stock chart that I believe will determine which direction MEDFF stock is heading in next. As a result, I am maintaining a neutral bias until the pattern is resolved.