OrganiGram Stock Continues to Correct Within Its Bullish Trend

organigram stock
iStock.com/Israel_Patterson

OGRMF Stock: Patience Is Warranted, and Weakness Should Be Embraced

Ever since late January, the markets have been inundated with elevated levels of volatility, and as a result, the markets have been experiencing wild market swings. Elevated levels of volatility are associated with weak markets, so it should come as no surprise that the major market indexes have not been performing well under such conditions. The marijuana sector has not been spared by this general market weakness. In fact, it has been hit especially hard as the entire sector has been caught in a downdraft and is currently undergoing a significant correction.

Corrections such as this one can be painful to endure, but as long as the overall bullish trend is intact, this weakness should be embraced rather than shunned. This is especially true if the price action is setting up another move toward higher prices.

For instance, OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI) stock has corrected along with its peers, and it is off about 32.67% from its highs. This move toward lower OGRMF stock prices has been difficult to endure, but there is solace in knowing it has done little to negate the stock’s predominant bullish trend, which is captured on the following OrganiGram stock chart.

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Chart courtesy of StockCharts.com

This OGRMF stock chart illustrates a bullish trend that has been characterized by price action that consists of a series of higher highs and higher lows—the quintessential characteristic that describes all bullish trends.

I captured this bullish trend using an uptrend line, which was produced by connecting the series of higher lows that were created on the OrganiGram stock chart.

An uptrend line is a simple tool, and aside from capturing the bullish trend, it also acts as a dividing line that separates a stock’s bullish trend from a potentially bearish one. This means that as long as OGRMF stock is trading above the uptrend line, I can only assume that a bull market in OrganiGram stock is still in development.

Support outlined the uptrend line currently resides at $2.25, and I am suggesting that a drop to that level should be embraced rather than shunned, especially if one believes that a bull market in OGRMF stock is still in development.

I believe that a bull market in OrganiGram stock is still in development because the price action above the uptrend line has been constructive in nature, which reinforces the notion that the predominant trend is bullish and still in development.

Constructive price action consists of an alternating wave structure, which is highlighted on the following OrganiGram stock chart.

Chart courtesy of StockCharts.com

This OGRMF stock chart has been annotated in order to highlight the wave structure responsible for creating and sustaining the bullish trend on OrganiGram stock.

This wave structure consists of two distinct waves: a consolidation wave and an impulse wave.

The impulse waves are highlighted in green and they are advancing in nature. Impulse waves capture the stage in a bullish trend where a stock sustains a move toward higher prices.

The consolidation waves are highlighted in purple and they are corrective in nature. Consolidation waves capture the stage in a bullish trend where the stock price corrects and refrains from advancing. Corrective price action is required in every bullish trend because it creates the necessary foundation so an advancing impulse wave can follow.

These waves create and sustain a bullish trend, and the development of these individual waves has been supported 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 stock prices, while bearish momentum implies that a stock is geared toward lower stock prices. This information is pertinent because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it.

The wave structure has coincided very nicely with the MACD indicator. Bullish MACD signals have accompanied impulse waves, while bearish MACD signals have accompanied consolidation waves. The MACD indicator is currently in bearish alignment, implying that a consolidation wave is currently in development.

I am waiting for the required signals in order to suggest that OGRMF stock is set to appreciate once again. Only when the consolidation wave is completed and a bullish MACD cross is generated will I have the necessary signals in order to suggest that another advance is underway.

Analyst Take

A correction in OrganiGram stock is currently in development, and there is solace in knowing that this corrective price action is occurring within the context of a bullish trend. What this means is that as long as the bullish trend is intact, once this correction has run its course, another attempt at higher OGRMF stock prices will likely follow.