RTI Stock: Waiting on One More Signal
There are only a few sectors at the moment that garner as much attention from investors as marijuana stocks, and for good reason. Marijuana is set to become legal in Canada and, with it, a recreational market will be born.
The enthusiasm for this sector has been around for a few years, and it has been responsible for the emotional roller-coaster ride that marijuana stocks have endured.
The only solace for investors has been that, every time a correction has ensued, the subsequent rally has taken the stocks to new highs.
I am focusing on Radient Technologies Inc (OTCMKTS:RDDTF, CVE:RTI) because there are indications suggesting that RDDTF stock is setting up to make another sustained move toward higher prices.
The first indication of such an outcome is a completed technical price pattern, which is highlighted on the following Radient Technologies stock chart.
Chart courtesy of StockCharts.com
This RRDTF stock chart illustrates that the completed technical price pattern is a falling wedge.
The falling wedge pattern is within the triangle family, but how it differs from other patterns is that it is characterized by price action that contains a series of lower highs and lowers lows. This is the quintessential characteristic of a bearish trend.
It is only when we connect the peaks and troughs using two trend lines that a falling wedge emerges.
These trend lines not only capture the pattern, but also define where significant levels of price support and price resistance reside.
This is, of course, very important information because a resolution of this pattern will only be determined when Radient Technology stock either breaks above price resistance or falls below price support.
Like triangle patterns, the trend lines are converging in nature. As a result, the longer the pattern is in development, the smaller the range becomes between price support and price resistance.
The convergence of space between support and resistance causes energy to build within the pattern. Only when the pattern is resolved is the energy finally released.
On May 31, the falling wedge was resolved when RDDTF stock managed to close above resistance.
This event suggested that an explosive move toward higher Radient Technologies stock prices was expected to follow. And, true to its nature, in the days that followed, the stock price appreciated to the tune of 28.7%
This completed price pattern suggests that higher stock prices are likely to follow. But, in order to confirm that a sustained move toward higher stock prices is in development, I require another signal.
The indicator that produces the signal that I require is highlighted on the following Radient Technologies stock chart.
Chart courtesy of StockCharts.com
That indicator is located in the lower panel of the above RDDTF stock chart, and it is labeled “MACD,” which stands for moving average convergence/divergence.
MACD is a very influential momentum indicator that 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 a very powerful force, and 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 stock chart have coincided quite nicely with this indicator.
The wave structure consists of impulse waves and consolidation waves.
The waves highlighted on the chart in green are impulse waves, and they define the period in a bullish trend when a stock stages a sustained move toward higher prices.
The wave highlighted in purple is a consolidation wave, and it defines the stage in a bullish trend when a stock corrects and refrains from advancing.
These waves work together to create and sustain a bullish trend.
The falling wedge doubles as a consolidation wave within this wave structure, and its completion suggests that an impulse wave is now in development. In order to confirm this notion, a bullish MACD signal is still required.
The signal lines that create a MACD signal are currently converging, and a bullish signal is possible in the weeks ahead.
Once this signal is generated, I will have seen the necessary indications to suggest and confirm that RDDTF stock is set to make a sustained move toward higher stock prices.
There are already indications suggesting that Radient technologies stock is primed for higher prices. That said, in order to confirm that RDDTF stock is making a sustained move, one more price signal is required.