Canopy Growth Corp. engages in the production and sale of medical cannabis. The company offers products including oils and concentrates, soft gel capsules and hemp. It focuses on the treatment of chronic pain, seizures, muscle spasms, nausea, and loss of appetite.
Take a look at the 1-year chart Canopy (NYSE: CGC) below with my added notations:
CGC had formed a key level of resistance at the $22.50 level (green) during the past few months. However, the stock broke through that resistance last week. If CGC comes back down to that $22.50 level, which should now act as support, a bounce could be expected.
The Tale of the Tape: CGC broke through its key level of resistance at $22.50. A long trade could be entered on a pull back down to that level. However, a break back below $22.50 could negate the forecast for a higher move and would be an opportunity to get short 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