META Stock: Patience is Warranted
Summer is almost upon us, and the media outlets that like to throw around adages like “sell in May and go away” will likely start throwing around the notion of the “summer doldrums.”
There are number of indices that are currently forging new highs, and the ramifications of a trade war is why I highly doubt that this summer is going to be a boring one.
For instance, marijuana legalization is set to go into effect in Canada at the end of this summer. Investors are likely to bid up the prices of marijuana stocks, going into this event.
I am now focusing on National Access Cannabis Corp (OTCMKTS:NACNF, CVE:META) because, in order to suggest and confirm that a sustained move toward higher META stock prices are in development, the applicable technical indications are required.
The first indication would be a bullish resolution of the technical price pattern highlighted on the following National Access Cannabis stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the META stock chart is a descending channel.
This technical price pattern is characterized by a sequence of of lower lows and lower highs, which is the quintessential characteristic of a bearish trend.
This sequence of lower lows and lower highs was used to create two downward sloping trend lines. These trend lines capture the descending channel by pinpointing where price support and price resistance reside.
As I mentioned, this pattern is bearish and, as long as National Access Cannabis stock is contained within it, lower prices are likely to prevail. In order to negate the bearish implications suggested by this pattern, META stock needs to break above price resistance, which currently resides at $0.85.
From a technical standpoint, this descending channel has been in development above the 200-day moving average.
The 200-day moving average acts as a dividing line that separates bullish stocks from bearish ones. Trading above the 200-day moving average is a bullish indication, while trading below it is a bearish indication.
As long as META stock continues to trade above the 200-day moving average, it augurs for a bullish resolution of the descending channel, suggesting that resistance will eventually be broken and that higher stock prices will prevail.
If this event is actually going to unfold, then I believe that a break above resistance will coincide with the indicator that is highlighted on the following National Access Cannabis stock chart.
Chart courtesy of StockCharts.com
The indicator that I am referring to, the moving average convergence/divergence (MACD), is on the above META stock chart.
MACD distinguishes 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.
Momentum is very influential, to such a degree that a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it. This is why the waves highlighted on the above chart have coincided impeccably with the MACD indicator.
The wave highlighted in green on the above chart is an impulse wave, and it is advancing in nature. This wave captures the stage in a bullish trend when the stock price sustains a progressive move toward higher prices.
The wave highlighted in purple is a consolidation wave, and it is corrective in nature. This wave captures the stage in a bullish trend when the stock price corrects and refrains from advancing.
These waves have been responsible for creating and sustaining a bullish trend in National Access Cannabis stock.
The descending channel also doubles as a consolidation wave. A break above resistance will complete this wave, implying that an advancing impulse wave is likely to follow. This anticipated impulse wave will need to be confirmed by a bullish MACD Cross.
A bullish MACD cross was generated in November 2017, and it confirmed that an impulse wave was in development. Similarly, a bearish MACD cross was generated in February 2018, which confirmed that the current consolidation wave was in development.
As I explained earlier, momentum is powerful force. In order to believe that a sustained move toward higher META stock prices is in development, I will be looking for a break above price resistance that coincides with a bullish MACD cross.
I am watching the developments on the National Access Cannabis stock chart because I believe that a number of indications will signal when META stock is likely to make its next move toward higher prices. Until these indications are generated, I will sit on the sidelines holding a neutral position on this stock.