Why Tilray Shares Must Clear This Key Level For Immediate Reversal Following Q2 Earnings Print

On Sunday evening, Benzinga asked its followers on Twitter what stock they’re buying at the open on Monday? From the replies Benzinga selected one ticker for technical analysis.

@KrystalAssassin, @natalioruiz99 and @itm_machine are buying Tilray, Inc (NASDAQ:TLRY)).

Tilray gapped up about 9% higher on Monday after printing its second-quarter earnings results. The cannabis giant reported revenue of $155 million, up from $129 million for the same quarter the year prior but down from the $168 million Tilray reported for the first quarter.

The Canadian-based company also announced Tilray Brands, Inc as its new parent name.

On Jan. 6, Cantor Fitzgerald analyst Pablo Zuanic said he expected Tilray’s stock to face pressure following its earnings print citing a 16% drop in recreational sales during the month of November. The analyst estimated Tilray’s second-quarter sales would come in at $163 million.

The cannabis sector has been in turmoil for close to a year with many stocks, including Tilray, trading at 52-week lows. If the seasonality of 2021 repeats this year, however, Tilray could be in for a boost because on Feb. 10, 2021, shares hit a 52-week high of $67.

See Also: How to Buy Tilray Stock Right Now

The Tilray Chart: Tilray has been trading in a consistent downtrend by making a series of lower highs and lower lows since Nov. 15 when the stock hit a high of $13.95. On Friday, the stock printed its most recent lower low at $6.29 but closed the trading day up slightly, which caused it to print a doji candlestick on the daily chart.

A doji candlestick is often found at the top or bottom of a trend and can indicate a reversal is on the horizon. For Tilray to make an immediate trend change, however, the stock will have to rise up above the most recent lower high of $7.70 printed on Jan. 3.

Tilray’s relative strength index (RSI) has been registering in below 35% since Dec. 9. When a stock’s RSI nears or reaches the 30% level it becomes overbought, which can be a buy signal for technical traders.

Tilray is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading well below the 50-day simple moving average, which indicates longer-term sentiment is bearish.

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  • Bulls want to see big bullish volume come in and push Tilray up to make a higher high or for the stock to trade sideways into a tightening range, while not falling below Friday’s low-of-day. There is resistance above a t$7.16 and $7.90.
  • Bears want to see big bearish volume come in and drop Tilray down below the $6.29 area, which will confirm the downtrend is still intact. The stock has support below at $5.90 and $5.08.

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