The stock lost nearly 10% yesterday and could be looking at further losses in the coming days. From a technical angle, is this a start of a larger correction or does the bullish cycle remain intact,?
To understand the current situation we need to take a look at the technical chart of CRON with the help of Elliott Wave Theory:
CRON Daily Elliott Wave Chart
Since its IPO, CRON has been advancing in impulsive waves as the stock keeps making higher highs and lower lows with enough separation. It ended the red wave III cycle from the October 2018 low, and therefore a correction is taking place in a 3 waves zig-zag structure.
The correction in wave IV can reach the extreme blue box area at $16.40 – $17.90 from where the stock will be able to rally again to new all time highs or bounce in 3 waves at least. However to be able to rally higher, CRON shouldn’t do an overlap with the September 2018 peak at $15.2 which would invalidate the impulsive structure.
Consequently, we believe the bullish trend looks to be intact at this stage and that the pullback would represent another buying opportunity for investors to continue riding the long side.