With an annual production capacity of approximately 283,000 kilos, Aurora Cannabis (ACBFF) has had somewhat of a difficult time maintaining its upward momentum. But today, Aurora opened up with a significant breakout gap of more than 15% after a report that Coca-Cola was in talks with Aurora to brew cannabis-infused beverages.
This follows an emerging trend that we are seeing across beverage and cannabis industries: with Constellation Brands’ investment in Canopy Growth; and Molson Coors’ announcement of entering a deal to produce weed-infused beverages.
A quick recap of what we’ve already covered: what has been interesting–strictly from a “technical” viewpoint–is that we were observing the potential emergence of a micro uptrend within a larger downtrend. This is nothing unique, as smaller and larger trend dynamics sometimes conflict, particularly when a larger trend change or reversal is underway. But such a convergence also makes it difficult to forecast or trade.
The breakout at (1), the seemingly indecisive follow through with the doji bar at (2), and the even thinner follow through albeit ironically with higher volume at (3) made the uptrend in late August somewhat tentative if not unconvincing. What added doubt to this price action was that it all took place within a bearish (A-B-C) bias as illustrated on the chart. After (3), the trend seemed to change, transitioning into a relatively wide trading range between the prices of 5.88 (support) and 7.23 (resistance).
That is, until the Coca-Cola announcement (4) which brought the stock to rally, opening up on a gap (potential breakout gap?) and reaching a high of 8.00 (at the time of writing). ACBFF has a long way to go to challenge its all-time-high of 12.30. But what we are looking at now is whether the price will remain above its support as defined by the trading range from which it had just broken out of. Also, note the selling pressure as indicated by volume. If there is to be any follow through, the volume would have to be significant, though opposite in sentiment as it currently displays.
- Resistance: 8.04
- Support: 5.88
- Trend: Unconfirmed
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