News that Amazon is supporting a federal bill to legalize cannabis use has helped Tilray stock to another day of double-digit gains.
The Cannabis sector was given a welcome boost yesterday as Amazon (AMZN) backed a federal bill to legalize marijuana. The company also announced that it would no longer test its use among employees not regulated by the transport department.
TLRY gained +11.90% on the day to close at $19.00.
The stock has had somewhat of a turnaround recently. Since the 13th of May, it has rallied +40%, bringing its 2021 return to +120%. Although there is still some way to go to reach its 2021 high of $67.00, the recent price action suggests there may be more upside to follow.
We can see on the 4-hour chart that the price has traded into a resistance zone between $19-$19.60. As the price was heading lower from its February high, this area acted as support. When the support finally was, the Tilray stock price dropped -20% to $15.18.
The relief rally that followed towards the end of April failed at $19.56. Clearly, this is an important level, and if broken, the price could head materially higher.
Some minor resistance can be seen around $24.50, but the ultimate target if the market breaks higher is the march 2020 high at $31.32.
Of course, this is a bold prediction, and the price would need to gain +63% to hit the target. Nonetheless, given the history of the stock, it is more than achievable. After all, TLRY is trading -94% below its 2018 all-time-high of $300.
The daily price chart shows a supportive trend line from October. This line has been a good support area and the technical trigger for the rally from the April low.
This trend is currently at $14.50. My bullish view will remain as long as the price stays above this trend. A close below this level will therefore cancel the bullish outlook.
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