Critical Levels to Watch in 3 Marijuana Stocks

Marijuana stocks have captured the imagination of speculators. As with any industry in its infancy, the potential rewards are massive but so, too, is the risk. Today we’ll look at three of the biggest players that could prove the best marijuana stocks to play.

Uncertainty and volatility are siamese twins. Joined at the hip, you never see one without the other. Pot stocks boast both in spades. As with any potentially chaotic security, traders can turn to technical analysis to help bring order to what appears, at first, as random.

By assessing trends, momentum and key price thresholds, you can begin to map out a trading plan on how to best game your favorite pot stock.

Let’s breakdown three of the most liquid marijuana stocks available. One offers a trade setup that’s worth trading right now.

Critical Levels to Watch in Marijuana Stocks: Aurora Cannabis (ACB)

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Source: ThinkorSwim

If you’re a chart watcher, Aurora Cannabis (NYSE:ACB) should be your favorite player in the industry. I consider it the best marijuana stock from a charting perspective. Its 2019 trend has been consistent and well-behaved. Since entering the year at a lowly $4.96, it more than doubled to $10.32 before settling down to its current perch of $9.

The series of higher highs and higher lows is dragging the 20-day and 50-day moving averages higher in a bullish fashion.

Volume patterns confirm buyers’ dominance with accumulation days scattered across the four-month trend. Additionally, we’ve seen very few signs of distribution during the recent pullback suggesting garden variety profit-taking versus a trend-ending exodus.

Support at $8.36 is crucial. If we break it, the trend turns nasty.

Until then buyers maintain the upper hand. You can buy ACB now or wait for a break above resistance at $9.35 to confirm the next upswing has begun.

Canopy Growth Corp (CGC)

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Source: ThinkorSwim

Compared to ACB, the action in Canopy Growth Corp shares has been much more challenging to trade. It’s in an overall uptrend, sure, but it lacks consistency. Whipsaw rules and indicators like moving averages lack their usual power.

Since doubling right out of the gate this year, CGC has settled into a trading range. At first, a symmetrical triangle formed, but last week’s breakdown morphed the pattern into more of a sloppy range. With CGC below the 50-day and 20-day moving averages, traders have a choice.

Either buy with a stop below recent support ($40.50) or wait for a break above resistance ($49) and a departure of the range before getting involved.

Cronos Group (CRON)

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Source: ThinkorSwim

Cronos Group was flying just fine until last month’s earnings release upended the short-term trend. The breach of support at $19 spelled trouble and CRON stock has yet to heal the damage. It’s now forming a low base near its next floor near $18 and is need of a positive catalyst.

For now, Cronos belongs in the too hard bucket. With multiple resistance zones sitting atop the stock there’s a heap of overhead supply waiting to thwart rally attempts. I suggest steering clear of bullish trades until the ceiling at $22 or even $24 is cleared. Otherwise, you run the risk of getting worn out due to choppy price action.

As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.

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