Last Tuesday, April 17, GW Pharmaceuticals (GWPH), known for its development of cannabis-derived medications, broke out of its downtrend in anticipation that its latest drug, Epidiolex—a treatment for childhood epilepsy—may favorably be reviewed and approved by the US Food and Drug Administration beginning today (Thursday, April 19).
- The breakout occurred as a gap up during market open.
- Note the significant volume supporting the breakout; breakouts with low volume tend to indicate a low probability of sustainability; high-volume breakouts indicate a greater chance of sustainability and upward mobility.
- Currently, the price is above its 50-day moving average, indicating that such a move may mark the beginning of an uptrend unless it breaks below 4 which marks previous resistance (and now support).
- Should price break below 4, there’s a possibility that such a move may be a sign of indecision and a potential set-up for a trading range until resistance is once again exceeded.
- This range marks the swing-lows at which, if broken, may signal a continuation of the downtrend particularly if price fails to exceed point 4 a second time around.
These are purely technical projections and have little to do with the fundamental factors that are currently driving the stock. Although many technicians believe that all fundamentals are already reflected in the price, such an opinion is not necessarily ours, nor do we feel that assumption is accurate.
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