TLRY Spike Study

Barkworth Pro Updated   
NASDAQ:TLRY   Tilray Brands, Inc. - Class 2
Just studying some and figured to put some thoughts to writing, solely for my own friction of thought.

$TLRY's sudden price jump occurred during the formation of a minuette 5 wave, which extended. The steep sell off right after, was pretty scary, but expected at the same time. I am trying to decide if we witnessed an anomaly, or if this insane price action marks the beginning of a reversal. The fact that it was a wave 5 certainly justifies the sell off, but there are several waves of higher degree, that haven't been completed yet.

There are many catalysts for the industry ahead, this year.
There are many catalysts ahead for TLRY , once the merger completes
The spike was caused by a short squeeze, meaning investors were correct to be bag holders, and shorts had to cover their positions
The sell off brought the price back to pre-squeeze levels, and found demand, confirming the above.

So now what?

There are examples of assets that spiked, then traded sideways for a time, before continuing higher. $GRWG is a good example, when it spiked from $2 to $20. If you study that spike, you see a retrace of 50%( ish ), 2 months sideways chop and then started on a textbook impulse wave to the current level of $55, with both spike, correction and impulse wave following Elliot Wave Theory to a tee.

Frost and Prechter, page 66, describes behaviour following fifth wave extensions:

"The most important empirically derived rule that can be distilled from our observations of market behaviour is that when the fifth wave of an advance is an extension, the ensuing correction will be sharp and find support at the level of wave 2 of the extension.

As marked on the chart here, you see the extension take off from iii, then plunge back into the ii range that I marked with green. The book continues:

"Sometimes the correction ends there, and sometimes only wave A ends there. Although a limited number of real life examples exist, the precision with which A waves have reversed at this level, is remarkable."

and finally:

"This guideline need not apply when the market is ending a fifth wave at more than one degree, yet the action suggests that we should still view this level as at least potential or temporary support."

For $TLRY, I am quite confident that we ended minuette 5 of minute 3. Even if I got a degree wrong here, we are still looking at minor 3 inside intermediate 3. So, in theory, we still have a series of 4-5's to complete before this primary wave is complete. At the same time, the top of minute 1 is at $9.66, so this asset has lots of room to move.

Trade with caution.
Comment: This was indeed interesting to study, some months later. When it lost the green zone and continued lower, it was clear that something was off. In line with the broader industry, the spike was a C wave, quadruple extended due to shorts squeezing.

After a long time, the new play involves a gap fill.

Comment: The current chart suggests that we could either see a corrective bounce before consolidating back to the $2 range, or we will see immediate continuation to the $2 range.

This is, of course, not what I am saying is going to happen. The chart, right now, looks like this.


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