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Aurora Cannabis Technical Analysis: Rally Ahead?



Curious about Aurora Cannabis technical analysis? The stock (ACB) was trading up 2.41% in yesterday’s trading session, lagging behind The Horizons Marijuana Life Sciences Index ETF’s (HMLSF) gain of 2.74%. Meanwhile, the ETFMG Alternative Harvest ETF (MJ) rose 2.55%, and the Horizons U.S. Marijuana Index ETF surged 1.18%.

Aurora’s stock price has been under pressure since the company reported disappointing quarterly earnings results. To learn more, see Options Analysis: What’s Next for Aurora Cannabis Stock?

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However, it seems that market sentiment is turning bullish. So, in this article, let’s take a look at ACB’s technical chart to see if a good entry point exists. Moreover, we’ll be taking a closer look at recent options activity to gauge the market sentiment for the stock. And we’ll see how much higher it could rise in the coming weeks. 

Aurora Cannabis technical analysis 

To see what’s going on with ACB stock, let’s first look at the technical chart. Technically speaking, many indicators suggest that the stock is currently oversold.

For instance, Aurora’s 14-day RSI index value of 22.21 is well below the “30” threshold, meaning that the stock is massively oversold. Moreover, the Money Flow Index (MFI) value of 23.11 is also floating close to the oversold area. One notable item here is that the RSI index value is well below the MFI value. And this difference means that, in the near term, the stock could be poised for a rebound. It’s also important to note that ACB is floating below its lower Bollinger Band, which indicates that Aurora Cannabis is currently oversold. 

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The next important consideration in our Aurora Cannabis technical analysis is the stock’s support and resistance levels. I think the downside in the stock movement is highly limited at the current levels. In contrast, the stock may continue to rise toward $3.00, which is the nearest resistance level. If this move plays out and $3.00 is breaking out, then $3.50–$3.60 comes into focus as medium-term target. 

Options traders bullish on Aurora Cannabis stock after sell-off

The $5.00 calls for expiration on November 22 for ACB have seen their open interest levels rise by over 12,014 contracts during yesterday trading session, bringing the total open interest to about 12,100. The puts traded for approximately $2.65 per contract as of Tuesday, November 19. This level means that the puts sold, and options holders expect the stock to stay above $5.00 by the expiration date. However, this bet looks like a risk-hedging trough options–based approach, given the expiration date.

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Plus, the open interest levels for $3.00 calls expiring on January 17 saw significant bullish activity during yesterday’s trading session. Per Barchart.com, the open contracts rose by 5,750 contracts to about 50,298. The contracts traded for approximately $0.20 per contract as of Tuesday, November 19. So a buyer of the calls would need the stock rise to $3.20 by the expiration date in order to earn a profit. That’s a gain of about 36% from ACB stock’s current price.

Finally, in yesterday’s trading session, the open interest for the $2.00 calls that expire on January 15, 2021, rose by 1,736 contracts to a total of 4,474 open contracts. A buyer of the calls would need Aurora Cannabis stock to rise to $2.80 by the expiration date to break even, which represents a gain of 19.6% from the current stock price.

How much higher can Aurora stock go?

Options traders expect that ACB stock could rise or fall by ~37% by the January expirations from the $2.00 strike, based on the option long straddle strategy. Now let’s gauge the wider market sentiment from our Aurora Cannabis technical analysis.

The number of open calls at a $3.00 strike outweigh the puts at about 16 to 1 for January expiration. Also, the calls at the $4.00 strike price significantly outweigh the put options with 15,084 open calls to just 2,823 open puts. Therefore, market sentiment for Aurora stock appears to be turning bullish. 

Looking for more Aurora Cannabis technical analysis? Please see Aurora Cannabis Stock Is Gearing Up for a Breakout and Aurora Cannabis Stock: What Options Traders Expect.


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