Canopy Growth (CGC) - Get Report stock has faded from its Monday highs a bit, but the shares are still higher by roughly 10% after the Ontario cannabis company reported its fiscal first-quarter earnings.
The company beat on earnings and revenue expectations, the latter of which grew 22% year-over-year.
Canopy Growth has had interesting price action as of late. Bulls saw a feel-good pre-earnings rally ahead of the print, but then a gut-punching two-day spill heading into the weekend.
The back-and-forth action led up to Monday’s report — where the stock could have really gone in either direction. So where to from here?
Trading Canopy Growth Stock
Check out the beautiful pre-earnings action we saw in Canopy Growth stock before that two-day slide last Thursday and Friday.
The stock failed at the 200-day moving average and dropped down to uptrend support (highlighted with the purple arrow on the chart).
The shares then embarked on a powerful breakout, rallying to almost $20 after clearing the 200-day. This moving average then acted as support on the dip before another rally back up to the July highs.
Ahead of earnings, this was beautiful action. But then traders got the pump fake. The stock fell 8.8% on Thursday and another 5% on Friday, cascading below its key moving averages and closing at its lows into uptrend support (blue line).
It really could have gone either way on earnings. Now that it’s going higher, though, we have a directional bias to work with.
The bulls have to see the 200-day and 20-day moving averages hold as support. Above puts the July highs in play near $19.50, which also filled the May gap. Above this area puts the May high in play near $22.
But should these key moving averages fail as support, uptrend support is back in play. Below that and $16 is possible, along with a larger potential breakdown in Canopy Growth stock.
Bull or bear, let the price action guide your trading action — the shares will go in whichever direction they choose, regardless of one’s bias.