Sundial Growers Nears The End Of A Pattern ... A Break Potentially Moves It Higher

Sundial Growers Inc. SNDL shares gapped up Wednesday morning and have since fallen after the company released its earnings report Tuesday.

The company reported earnings of $1.7 million compared to a loss of $32.7 million in the previous quarter. The company released EBITDA of $3.3 million compared to the previous quarter’s EBITDA with a loss of $5.6 million.

Sundial Growers was down 5.01% at $0.70 at last check Wednesday afternoon.

Sundial Growers Daily Chart Analysis:

• Sundial Growers recently broke below the potential support level near the $1 area and are trading within what technical traders could call a falling wedge pattern.
• The stock is trading below the 50-day moving average (green) and recently bounced at the 200-day moving average (blue), indicating the stock is likely facing a period of consolidation.
• The 50-day moving average may hold as a resistance, and the 200-day moving average was just able to hold as support and may again in the future.

Key Levels To Watch:

• The falling wedge pattern happens after a stock makes an upwards run and pulls back with highs falling at a steeper rate than the lows.
• The stock would need to cross above the resistance line of the pattern to see an upwards move, and this move would likely come with above-average volume.
• The $1 level has been a key area on the stock. This area held as resistance previously before it became support. The stock broke below this level in mid-April 2021 and has since held the level as resistance again.

What’s Next?

Bullish technical traders would like to see the stock break out of the falling wedge pattern and build higher lows up to the $1 resistance. If the $1 resistance can hold, and the stock can consolidate above this level, it could see a push higher.

Bearish technical traders would like to see the stock break below the line connecting the lows in the pattern, which could bring a strong downwards push. If the 200-day moving average were to break, sentiment in the stock may turn bearish and it could continue falling.

(Photo: Sundial)