Canopy Growth Corporation (CGC) is the leader in the cannabis sector for a number of fundamental reasons thanks in part to their relationship with Constellation Brands. While our swing trade strategy does not consider fundamentals, it at least provides that extra ounce of confidence that the broader trend is likely to continue.
From a technical stand point, the trend is clearly bullish. Recently there was a sharp corrective move which price is now trying to stabilize from. While it is possible for price to test the high 30’s again, (double bottom?), it is also possible to see a sharp recovery since the environment has been very supportive for this sector.
This swing trade idea aims to capitalize on the continuation of the bullish trend and a push to a new high which can lead to a test of the low 60’s. It can take a week or two for such a move to develop.
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Here is the swing trade idea:
Buy Stop: 43.50
Stop Loss: 37.50
Target 1: 49.50
Target 2: 55.50
Target 3: 61.50
It is very important to respect the buy stop as well as the stop loss orders. While it isn’t perfect, the buy stop does help to reduce false starts and price noise when entering a position.
The stop loss orders save a LOT of money over the long run. Yes, there will be times when you get stopped out, only to watch the stock go higher, BUT what you are protecting against is the ONE time the stock continues to dramatically lower prices. This is how people get into margin calls and wipe out accounts. Stop loss orders help to avoid this.
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