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Aurora Cannabis Has Got Momentum - Can It Continue?

Aurora Cannabis has been on fire but volatility is starting to climb. Let's look at the chart with earnings on deck.
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The cannabis stock trade has been manic so far this year, with Aurora Cannabis  (ACB) - Get Aurora Cannabis Inc. Report and its peers soaring higher.

Aurora will look to maintain that momentum on Thursday when it reports earnings after the close of trading. As the volatility ramps up though, it’s certainly not a slam dunk. At least not in the short term.

Shares rallied 21.2% on Wednesday, giving Aurora three straight daily gains. For the week, shares were up almost 50% coming into Thursday.

How the stock trades ahead of earnings and on Friday may tell investors a lot. Specifically, it should tell us whether this rally has legs or if the recent squeeze higher was just a lot of hot air and hype.

Others like Aphria  (APHA) - Get Aphria Inc Report, Tilray  (TLRY) - Get Tilray Brands Inc. Report and Canopy Growth  (CGC) - Get Canopy Growth Corporation Report have been on the move too. Part of that’s being driven by recent M&A action and part of it is simply industry-wide momentum.

Can Aurora's momentum be maintained?

Trading Aurora Cannabis

Daily chart of Aurora Cannabis stock.

Daily chart of Aurora Cannabis stock.

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So far the answer to that question is no, with shares down over 15% on Thursday ahead of the print.

But that’s what investors can expect with volatile holdings. From here, it’s all about how it handles key areas.

For Aurora Cannabis stock, one such area is $14.50. There it finds the November high, which was a key threshold to higher prices earlier this month. Additionally, the stock will find its rising 10-day moving average in this area.

That mark was supported multiple times this year. On any post-earnings pullback, the bulls will want to see it continue to act as support.

Below that area could put uptrend support in play (blue line), as well as the 50-day moving average.

If there is a real pain in the name, investors will need to see $10 and the 50-week moving average hold as support. The latter was major resistance in November and December, before turning to support in late January.

On the upside, let’s see if Aurora Cannabis can take out the May high at $19.68 and clear $20. If it can, we could see another ignition higher.

To keep it simple, we’re watching $15 on the downside and $20 on the upside.