It’s not uncommon to see one pattern that packs a number of different and sometimes incompatible interpretations. Sometimes these incompatibilities have to do with direction–long or short–and sometimes with regard to entry and exit points. 

 

But as technical analysis can be treated more as a means to anticipate numerous potential outcomes rather than predicting any single outcome, it all boils down to the angle from which you prefer to place your wager. 

 

ETFMG Alternative Harvest ETF, a cannabis exchange-traded-fund we’ve been following some time, presented us with an interesting set of patterns at a possible corrective or reversal phase following a 3-month downtrend, or a 3-month corrective phase of a 6-month uptrend (both are correct; implications of both are not necessarily compatible).

MJnow-300x157 Technical Swing Trading Spotlight - Four Opportunities in MJ

 

Four potential swing trades are easily identifiable on the chart. We’ll go through each one.

 

The first trade is an aggressive entry into the current downtrend. A breakout of the local swing high at [1] at the low of 32.50 would set its first target at the swing low [1a] at the price of 30.00. Second short target would be within the 29.25 range, a support level [1b] going as far back as November 2018.

 

The second trade, also a short, might play the breakdown at [2] of the symmetrical triangle at the 31.05 range. One possible target would be derived by subtracting the height of the pattern–3.50–from 31.05 which would give you the target of 27.55 as shown at [2a].

 

The third trade, this one with a bullish bias, might see the failure of the last candle to break below minor support at 31.00 as a sign that the next few sessions may mark a temporary or more long-term reversal. So a break above [3] would set its sights at 32.65, the most recent swing high [3a] and a second target at the May 22 swing high of 34.55 as shown at [3b].

 

The fourth trade, also bullish, would anticipate an upward breakout above the symmetrical triangle between 32.10 and  32.65 at [4]. Using the height of the pattern, the upside target would be the range between 35.60 and 36.15 as shown at [4a].

 

A swing trader would look at these viable trades and have to decide which one to follow (if any). They’re all fairly easy setups, their targets, reasonably low hanging fruit.

 

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