Short
CGC Monthly Reversal Candle Setup
#CGC -#CGC Canopy Growth Corp has created a bearish reversal pattern on the monthly chart that is similar to an Evening Star Reversal pattern. The current reversal pattern doesn’t fulfill the requirements to be a true Evening Star Reversal due to it not occurring at the top of an uptrend in price, but it could be a signal of downtrend continuation, especially when taking in to account the recent bearishness across all markets over Covid19 fear and the impacts that the virus is having on local economies and the global supply chain.
Evening Star Reversals are when a move up in price(candle 1), is followed by a doji/spinning top candle(2) followed by a move down on candle 3 that retraces at least 50% of the first candle in the three candle pattern. This pattern shows traders initially are bullish on candle 1 by pushing price higher, then become indecisive on candle 2 which creates upper and lower wicks of equal length with a monthly close near the monthly open which creates a small candle body. On candle 3 they take price decisively lower and retrace half of the pattern move.
While this candle pattern setup is bearish, in needs confirmation on the next candle via a price move below the low made on candle 3. In CGC’s case, a monthly close in March below $18.78 would be pattern confirmation and likely mean more downside for price going forward.
The PPO and RSI indicators below the chart are also showing negative price trend and momentum. The PPO is in a negative cross and declining with a fresh PPO line(green) move below the 0 level which indicates a negative trend for price. The RSI is also in a negative cross and declining with the RSI line colored purple and declining below its signal line(white). The RSI is also below the 50 level with a purple shaded background which indicate a negative momentum trend behind price.
Evening Star Reversals are when a move up in price(candle 1), is followed by a doji/spinning top candle(2) followed by a move down on candle 3 that retraces at least 50% of the first candle in the three candle pattern. This pattern shows traders initially are bullish on candle 1 by pushing price higher, then become indecisive on candle 2 which creates upper and lower wicks of equal length with a monthly close near the monthly open which creates a small candle body. On candle 3 they take price decisively lower and retrace half of the pattern move.
While this candle pattern setup is bearish, in needs confirmation on the next candle via a price move below the low made on candle 3. In CGC’s case, a monthly close in March below $18.78 would be pattern confirmation and likely mean more downside for price going forward.
The PPO and RSI indicators below the chart are also showing negative price trend and momentum. The PPO is in a negative cross and declining with a fresh PPO line(green) move below the 0 level which indicates a negative trend for price. The RSI is also in a negative cross and declining with the RSI line colored purple and declining below its signal line(white). The RSI is also below the 50 level with a purple shaded background which indicate a negative momentum trend behind price.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.