iStock.com/OlegMalyshev ISOLF Stock Is Geared for Higher Prices
There is a lot of enthusiasm about marijuana stocks at the moment, and this newly established sector is set to go into full swing come July 2018, when the Canadian government finally legalizes marijuana on the federal level, opening the door to billions of dollars in revenue stemming from the recreational marijuana market.
Many retail investors have turned to the licensed producers, which is only logical, but I am taking things a step further by focusing on Isodiol International Inc. (OTCMKTS:ISOLF, CNSX:ISOL), a company that extracts concentrate from marijuana.
Isodiol is an industry leader in the manufacturing and development of cannabidiol (CBD), which is touted as having the medicinal property of marijuana. The concentrate is used in a number of products, ranging from ointments, prescription medications, and even edibles.
In all honesty, as great as this may sound, the real reason I like Isodiol stock is that the ISOLF stock chart is very compelling. There are numerous technical indications suggesting that this stock is currently poised to make a move toward higher stock prices.
The first thing that caught my eye was that Isodiol stock has just completed a very powerful technical price pattern.
This technical price pattern is highlighted on the following Isodiol stock chart.
Chart courtesy of StockCharts.com
The technical price pattern responsible for drawing my attention to ISOLF stock was a descending triangle. This technical price pattern is characterized by price action that consists of a static low and lower highs.
Capturing this pattern was accomplished by connecting these price points using two converging trend lines. The upper trend line acts as a level of price resistance while the lower trend line acts as a level of price support.
The converging nature between support and resistance is why triangles are particularly powerful price patterns. As the triangle develops, energy is being stored within the pattern as investors position themselves on either side of support and resistance in anticipation of a resolution of the pattern.
On March 8, the descending triangle was resolved via a breakout and, as a result, higher ISOLF stock prices are now likely to follow.
On its own, this pattern is quite bullish, but when I took a deeper look, I found out that this descending triangle is actually a part of a much larger wave structure, which only serves to magnify my enthusiasm about this stock.
This wave structure is highlighted on the following Isodiol stock chart.
Chart courtesy of StockCharts.com
The wave structure highlighted on the ISOLF stock chart above is constructive in nature and it consists of an alternating wave structure containing impulse waves and consolidation waves.
The impulse waves, which are highlighted in green, are advancing in nature, and they define the stage in a bullish trend when the stock price stages a sustained and resilient move toward higher prices.
The consolidation waves, which are highlighted in purple, are corrective in nature, and they define the stage in a bullish trend when the stock price corrects and refrains from advancing. The corrective price action is necessary, in order to alleviate the overbought conditions that were created during the impulse wave that preceded it, thereby creating the necessary environment where a new advancing impulse wave can follow.
The function of these waves is to create and sustain a trend.
The descending triangle doubles as a consolidation wave and its completion implies that a new impulse wave is now in development, which further reinforces the notion that ISOLF stock is currently geared for higher prices.
If these indications were not enough, I took an even deeper look and found the icing on the cake.
The following Isodiol stock chart illustrates a picture that is worth a thousand words, because it completely captures the bullish trend in Isodiol stock.
Chart courtesy of StockCharts.com
This ISOLF stock chart illustrates that the wave structure, which has been responsible for creating the bullish trend, has been oscillating within the confines of an ascending channel.
An ascending channel is a price pattern that captures a bullish trend using two parallel upward-sloping trend lines that represent levels of price support and resistance. The upper trend line, representing resistance, was created by connecting a series of higher highs, while the lower trend line, representing support, was created by connecting a series of higher lows.
As long as Isodiol stock continues to oscillate within this channel, I can only assume that a bullish trend is still in development.
The consolidation wave that was just completed also served to test support outlined by this channel. The previous time that support was tested, ISOLF stock surged higher and, in less than a month, resistance outlined by the ascending channel was being tested.
I am not going to say that such a scenario is going to play out indefinitely, but, at the same time, I also cannot say it won’t either. One thing I can say with some assurance is that the price action on the Isodiol stock chart supports the notion that higher stock prices currently are in development.
Analyst Take
I am bullish on Isodiol stock because a number of technical indications are currently suggesting that ISOLF stock is poised to make a move toward higher stock prices. I will maintain this bullish view as long as the stock price continues to trade above support outlined by the ascending channel.