Cannabis Technical Trading Expert D.R. Barton Jr. is one of the most widely read financial coaches and a world-renowned authority on technical trading with 30 years of experience. Today, he’s going to tell you how to utilize a powerful technical analysis tool…
In my last article for the members of the National Institute for Cannabis Investors, we dug into the world of technical analysis.
Fundamental analysis looks at the past to forecast future business performance and predict future prices.
Technical analysis is the study of human psychology, which is represented in the form of price action on a chart. The study of historical price movements of a stock relay the fear and greed associated with that stock.
Technical analysts look for repeatable patterns and indications that can predict future price movements.
This can seem complicated at first, but I wanted to break things down today and talk about how to utilize certain strategies when investing in cannabis stocks.
The Trend Is Your Friend
Today, I wanted to talk about the concept of trend and the trend indicator called trend lines.
In simplest terms, the trend is the direction a stock is moving. The most basic description of a stock in an uptrend is when price is making a series of higher low prices over time.
Here’s a chart of consumer product giant Proctor & Gamble, the maker of many iconic brands like Tide detergent, Bounty paper towels, and Crest toothpaste:
This is clearly a stock in an uptrend.
The trend line is simply a straight line that connects two or more price points (higher lows for an up trend or lower highs for a down trend) and extends into the future to act as support for an up trend or resistance for a down trend.
Here’s the same Proctor & Gamble chart with a trend line drawn:
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Now, let’s apply this powerful tool to help set expectations for one of the largest cannabis stocks in the market.
A Technical Look at Aurora Canabis
A thorough analysis of Aurora Cannabis Inc. (NYSE: ACB) has been well covered by Greg Miller and his staff through the NICILytics stock rating tool, so you already have top quality fundamental analysis for the company.
But looking at its price chart over the past year, it may at first seem tough to make heads or tails of what’s going on:
Now, if we add a trend line, we can get some clarity on the longer term picture:
With the help of the trend line, we can see that ACB is currently testing the upward sloping trend line that has been 12 months in the making.
If the stock can rebound from these current prices, the long-term trend line will remain intact; a strong positive for the technical outlook.
And even though the last five months have shown a decided down trend, if we look at the trendline for the shorter time frame, we’ll see that there’s actually some encouraging news:
And lastly, there are still two key prices under the current price for Aurora that provide long-term support:
If you are looking for a time to open a position in Aurora or add to your holdings, this key turning point is a very technically strong place to do it.
I also just did a video interview with Greg this week, and members of the Cannabis Investor’s Report can access it here.
Great trading and God bless you,
D.R. Barton, Jr.
Cannabis Technical Trading Expert, National Institute for Cannabis Investors
P.S. At the National Institute for Cannabis Investors, we always want to keep you up-to-date on the latest and greatest investing tools and methods. Not only do we bring different types of traders onto our advisory board to help you out, but we also take the time to analyze every cannabis company on the market (and even some that haven’t gone public yet.) Our NICILytics database has information on over 190 cannabis companies… and it’s all laid out in an easy-to-use manner. This investing tool could be the secret weapon you need to master the markets. To learn how you can get immediate access, click here.
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August 30 2019