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How Far Can Aphria Rally After Bullish Earnings?

Aphria scorches higher as earnings help fuel the latest rally. What do the charts look like after the stock hit multi-year highs?

Aphria  (APHA) - Get Aphria Inc Report took a long time to find its groove. But the stock isn't  having any trouble on Thursday, up more than 17% on better-than-expected earnings from the cannabis company.

The entire cannabis sector has been in focus leading up the presidential election in November.

Not only did the winners of the presidential and congressional races matter, but so too did the ballot results regarding marijuana legalization in specific states.

State by state, vote by vote, this group has been gaining legislative momentum. Of course, that has translated to momentum in the stock prices.

A quarter that’s being celebrated by Wall Street certainly helps. Of course, Aphria was in the news well before earnings, on news of its tie-up with Tilray  (TLRY) - Get Tilray Brands Inc. Report.

Trading Aphria

Weekly chart of Aphria stock.

Weekly chart of Aphria stock.

As you can see on the weekly chart, Aphria has not had a very good run. While the stock caught fire in late 2017 and again in 2018, the group ultimately fell out of favor.

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Worth noting, Aphria put in a higher low in late 2018 vs. its prior high, up at $19.87.

As a result, a downtrend resistance mark formed (blue line), which Aphria broke out over in November. At the same time, the stock powered through its 200-week moving average as well.

The stock gave investors a beautiful opportunity right at the end of December. Shares pulled back to the 10-week and 200-week moving averages, as well as the backside of that prior downtrend resistance mark.

Now with Thursday’s rally, shares are clearing the 2019 highs, as Aphria hits multi-year highs.

On a dip, I’m waiting for the 10-day moving average to catch up to Aphria to see if it will act as support.

From here, I would love to see Aphria hold the $10 to $11 area on a pullback. That is where the stock struggled with in 2019 and holding that level would reiterate bulls’ control.

On the upside, a move to the 61.8% retracement near $13 could be in the cards. Above that and perhaps $16 is possible. Aphria struggled with that level in the second half of 2018, while it also serves as the 78.6% retracement.