Canopy Growth Corporation, together with its subsidiaries, engages in growing, possession, and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, softgel capsules, and hemps.
Take a look at the 1-year chart of Canopy (NYSE: CGC) below with my added notations:
CGC created a common chart pattern known as a triangle. Combining a down trending resistance (red) with an up trending support (green) forms the triangle pattern. As the support and resistance converge on each other, the pattern is created.
Since there is no true way to know which way the stock will break, most traders will wait for the breakout or breakdown before entering a trade. CGC broke support earlier this week, thus will likely continue lower.
The Tale of the Tape: CGC broke the support side a symmetrical triangle, thus traders could look for bearish opportunities in the stock.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT