Dixie Brands Descending Triangle Pattern
#DIXI.U - Dixie Brands closed Friday below a descending triangle support line(lower orange line), which up until Friday had been propping price up as traders had previously been holding above $0.135 which is where the lower triangle line is drawn.
A descending triangle is a bearish chart pattern that is created by drawing one trend line that connects a series of lower highs and a second horizontal trend line that connects a series of lows. Oftentimes, traders watch for a move below the lower support trend line because it suggests that downward momentum is building and a breakdown in price is possible. Descending triangles are a popular chart pattern among traders because they show that the demand for a stock is weakening. When price breaks below lower support, it is an indication that downside momentum is likely to continue.
Dixie price is now below the lower triangle line which is a bearish indication, but when trend-trading 2-3 days below a support line is needed before it can be considered confirmation of loss of price support and continuation of the downtrend.
While price closed below the lower triangle line on Friday, traders also created a long, lower price candle wick which indicates that as bearish traders attempted to push price lower, bulls stepped in and kept price near the upper end of the daily trading range. Usually when you see long wicks near the top of an uptrend or bottom of a downtrend, it indicates that a top or bottom in price is attempting to be made, respectively.
The decline in Dixie price over the past few months can mainly be attributed to overall sector weakness as the entire cannabis sector has been on a decline since mid-2019, and this is a sector that mostly follows the top market cap cannabis stocks, namely Canopy Growth Corp. The recent stock market sell-off hasn't helped the sector either as traders have been reluctant to buy much of anything over Covid19 fears and its affect on global supply chains.
If you're a long-term holder of Dixie, the name of the game is to add at these low levels and lower your cost average. If you're a trader, a long entry can be made here in anticipation of a global market reversal early this week due to the oversold nature of most markets right now. Short-term trader stop-losses should be placed just below Fridays wick, or just under the 0.10c level. A breach of that level would likely indicate further downside in price.
A descending triangle is a bearish chart pattern that is created by drawing one trend line that connects a series of lower highs and a second horizontal trend line that connects a series of lows. Oftentimes, traders watch for a move below the lower support trend line because it suggests that downward momentum is building and a breakdown in price is possible. Descending triangles are a popular chart pattern among traders because they show that the demand for a stock is weakening. When price breaks below lower support, it is an indication that downside momentum is likely to continue.
Dixie price is now below the lower triangle line which is a bearish indication, but when trend-trading 2-3 days below a support line is needed before it can be considered confirmation of loss of price support and continuation of the downtrend.
While price closed below the lower triangle line on Friday, traders also created a long, lower price candle wick which indicates that as bearish traders attempted to push price lower, bulls stepped in and kept price near the upper end of the daily trading range. Usually when you see long wicks near the top of an uptrend or bottom of a downtrend, it indicates that a top or bottom in price is attempting to be made, respectively.
The decline in Dixie price over the past few months can mainly be attributed to overall sector weakness as the entire cannabis sector has been on a decline since mid-2019, and this is a sector that mostly follows the top market cap cannabis stocks, namely Canopy Growth Corp. The recent stock market sell-off hasn't helped the sector either as traders have been reluctant to buy much of anything over Covid19 fears and its affect on global supply chains.
If you're a long-term holder of Dixie, the name of the game is to add at these low levels and lower your cost average. If you're a trader, a long entry can be made here in anticipation of a global market reversal early this week due to the oversold nature of most markets right now. Short-term trader stop-losses should be placed just below Fridays wick, or just under the 0.10c level. A breach of that level would likely indicate further downside in price.
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