Marijuana is getting a bounce; but risk od downside exists
I hold a Long position in MJ and may purchase additional shares within the next 24 to 72 hours. I use dollar cost averaging to add to my long positions consistently when monthly cash flow is positive.
Analyzing the monthly, weekly, daily, and 4-hour charts to establish long term trend lines and important pivot points, MJ is reaching a critical juncture. We are at a strong level of support,in oversold territories, but don't let that RSI fool you, this can go significantly lower. Mid 26s is strong support, but we could see low 25s.
There are many questions about the industry that remain unresolved, and because its in its infancy, those questions will remain unanswered. However, the chart says a few things. Particularly, as seen in the weird set of lines on the weekly, we are reaching a critical point of historical support. The reality is that I see the downside of a potential trade here being about 7.5%; so I'd use a 10% hard stop. I'd expect this to bounce and head back to 31 by end of autumn.
The 1:1 risk reward doesn't seem to be worth it for trade purposes, unless you're willing to hold a potential bag or dead money for some time. For me, I will continue to dollar cost average on a regular basis for a multi-year hold.
Analyzing the monthly, weekly, daily, and 4-hour charts to establish long term trend lines and important pivot points, MJ is reaching a critical juncture. We are at a strong level of support,in oversold territories, but don't let that RSI fool you, this can go significantly lower. Mid 26s is strong support, but we could see low 25s.
There are many questions about the industry that remain unresolved, and because its in its infancy, those questions will remain unanswered. However, the chart says a few things. Particularly, as seen in the weird set of lines on the weekly, we are reaching a critical point of historical support. The reality is that I see the downside of a potential trade here being about 7.5%; so I'd use a 10% hard stop. I'd expect this to bounce and head back to 31 by end of autumn.
The 1:1 risk reward doesn't seem to be worth it for trade purposes, unless you're willing to hold a potential bag or dead money for some time. For me, I will continue to dollar cost average on a regular basis for a multi-year hold.