Cannabis industry: Gearing up for 2020

Intermediate

The cannabis industry has exploded, since Canada legalized the formerly illegal drug, now with some big US states legalizing it. Thugs has sent a wave across the world and sparked a debate for more countries to legalize cannabis. This is a massive market worth billions of US Dollars every year.

The chart in the technical analysis section is of Canopy Growth Corporation (CGC), which is a large company based in Canada with a market cap of $7 billion, producing a wide range and use of medical cannabis products like oil and concentrates. The Chief Financial Officer of another major cannabis company Constellation Brands (STZ), David Klein, will now be the new CEO at CGC from January 14, 2020. Constellation owns 38% of Canopy Growth, and Klein is already Canopy’s board chairman. CEO Mark Zekulin will resigns on December 20.
On top of that, news came out that Wayv is getting closer to mainstreaming the cannabis industry, becoming the first digital payment solution for the cannabis industry. This shows even more progress in the development of the industry. It also indicates the market expectation that further legalization among the developed nations may proceed in 2020. All this leads to a bullish prognosis for its stocks.

Technical analysis of Canopy Growth Corporation (CGC)

Elliott waves suggest the end of the abc correction wave after the massive uptrend we had that topped in autumn 2019. While we broke and retested the downtrend line, now at the resistance level near 22. It now looks like an inverse head and shoulders pattern is forming, though we are not seeing much divergence on RSI. Price action shows buyers gearing up for the break. Fundamental news should drive the market up as well. Targeting the 30 level for now as the Minimum Price Objective (MPO ) of the pattern.

CGC chart

Broader stock perspective


As we head towards the start of 2020, we are likely to see new positions opened by major investors to hold for the duration of the year. Usually large investment funds and hedge funds invest in industries that expect a significant rise and cannabis is one of them according to recent studies. So getting in the trade early is a good risk-reward strategy to make sure you do not miss the major move.

Editor

Anton is an accomplished Director at Markom Development Ltd where he combines cross functional competencies in staff management, operations planning, customer retention and strategy development. BU... Continued

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