N Stock: Critical Juncture
2017 was an excellent year to be invested in the marijuana sector because, by year’s end, almost every stock that populated this sector was up a significant amount. 2018 has not been so kind. The year began with a significant correction, and while some stocks have staged a rally, others have not. This divergence is why investors are starting to understand that not all marijuana stocks are created equal.
I am focusing on Namaste Technologies Inc (OTCMKTS:NXTTF; CVE:N) stock because it is one of the stocks in this sector that has yet to rally, and the stock is now approaching a critical juncture. Namaste stock is either going to significantly appreciate or depreciate from where it currently stands, which suggests a volatile move is on the horizon.
My beliefs are centered around a number of technical indicators suggesting that a directional move is imminent.
The first set of indicators is highlighted on the following N stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the stock chart is a falling wedge. This technical price pattern is created when the price action is characterized by a series of lower highs and lower lows.
Capturing this pattern was achieved by connecting the peaks and troughs that were created by the price action that formed this pattern. This produces two converging trend lines. These trend lines pinpoint where price support and price resistance reside.
The upper trend line pinpoints where price resistance resides, while the lower trend pinpoints where price support resides. This is important information because, in order to complete the pattern, Namaste stock needs to exit the pattern by sustaining a close above resistance or below support.
There was an attempt to break below support in May 2018, but that move was quickly averted, and Namaste stock continues to trade within the falling wedge. I believe this pattern is likely to be resolved very soon and a directional move will follow. There is currently a $0.25 spread separating price support and price resistance. This small range suggests that one of these levels is going to give fairly soon.
The Namaste stock price has reached a critical juncture, the moving averages that were responsible for creating the golden cross have completely converged. They are in danger of creating a death cross. This reinforces the notion that the stock isn’t likely to stay dormant for very much longer.
A golden cross is a bullish signal that is created when the 50-day moving average crosses above the 200-day moving average. This popular signal suggests that a bull market is in development. This signal was generated in November 2017 and was the precursor to the monster move that followed, where N stock tacked on 700% in a little over a month.
If N stock does not exit the pattern in a bullish manner by breaking above resistance, the moving averages are in danger of generating a death cross. A death cross would suggest that a bear market is in development, which will augur for a breakout toward lower prices.
The next set of indications highlighted on the following Namaste stock chart also illustrates the critical juncture that N stock is currently at, suggesting that the stock price is likely to move.
Chart courtesy of StockCharts.com
This Namaste stock chart has been annotated in order to highlight the wave structure and momentum indicator that have been responsible for supporting the advance in N stock.
The wave structure consists of an impulse wave and a consolidation wave.
Impulse waves are advancing in nature, and they capture the stage in a bullish trend when the stock price stages a sustained and resilient move toward higher prices. Consolidation waves are corrective in nature, and they capture the stage in a bullish trend when the stock price corrects and refrains from advancing.
Namaste stock is currently in a consolidation wave, and the corrective price action characterized by this wave is necessary to alleviate the overbought conditions that were created during the impulse wave that preceded it. This would create the necessary environment where a new advancing impulse wave can follow.
If this is indeed the path N stock is going to take, and an impulse wave is going to follow, it will be confirmed by the moving average convergence/divergence (MACD) indicator.
MACD is a momentum indicator that determines whether bullish or bearish momentum is influencing the price action in a stock. Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices.
This is important and pertinent information because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it. This is why impulse waves have been confirmed by bullish MACD crosses, and consolidation waves have been confirmed by bearish MACD crosses.
The MACD indicator is in bearish alignment, and until a bullish MACD cross is generated, caution is warranted because it continues to support the notion of lower prices.
Namaste stock has reached a critical juncture, suggesting that a directional move is on the horizon. An influential indicator is currently supporting the notion of lower N stock prices, and until this indication suggests otherwise, caution is warranted.