Tilray Brands, Inc (NASDAQ:TLRY) gapped up about 4.5% higher on Thursday on news that the Cannabis Administration And Opportunity Act (CAOA) has been introduced in the U.S. Senate.
The long awaited and highly anticipated bill, introduced by Senate Majority Leader Chuck Schumer and Senators Ron Wyden and Cory Booker, would remove marijuana from the Controlled Substances Act and expunge prior convictions if signed into law.
Congress has voted on several bills in recent years that aim to pave the way for federal legalization of cannabis, including the SAFE Banking Act, which the Senate has rejected six times.
After gapping up on the news, Tilray fell to trade under Wednesday’s low-of-day. If history is any predictor of the CAOA’s future, the bill is unlikely to reach President Joe Biden’s desk anytime soon.
Read What’s In The CAOA: BREAKING: Schumer, Booker And Wyden Unveil Cannabis Legalization Bill - Here's What's In It
In general, the beaten down cannabis sector has been trending slightly higher recently and from a technical standpoint, Tilray’s pull back on Wednesday may be healthy because the stock is trading in a confirmed uptrend, in need of a higher low.
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The Tilray Chart: Tilray reversed course into an uptrend on July 5 and has since made a consistent series of higher highs and higher lows. The most recent higher low was formed on July 15 at $3.30 and the most recent confirmed higher high was printed at the $3.81 mark the day prior.
- On Thursday, Tilray may have formed the next higher high within the uptrend. Bullish traders and investors can watch for the stock to print a reversal candlestick above the $3.30 level over the coming days, which could indicate the next higher low is in. If that happens, it could also provide a solid entry for traders who aren’t already in a position.
- If Tilray closes the trading session near its low-of-day price, the stock will print a bearish Marubozu candlestick, which could indicate lower prices will come again on Friday. If bulls come in and close Tilray's daily candle with a long lower wick, the next higher low may be in.
- Tilray is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading near to the 50-day simple moving average (SMA). Bullish traders would like to see Tilray close the trading day above the 50-day SMA, which would indicate longer-term sentiment is bullish.
- Tilray has resistance above at $4.24 and $4.71 and support below at $3.61 and $3.02.
