Tilray Stock Flies High Amid SAFE Banking Hopes: Here's Why Sentiment Has Turned Bullish

Tilray Brands, Inc TLRY surged 11.79% at one point on Monday, with continued momentum after skyrocketing a total of 25% since Nov. 28.

Renewed hope that the Secure and Fair Enforcement Banking Act of 2021 (SAFE Banking Act) will pass through the Senate during this lame-duck session has helped to lift the beaten-down cannabis sector.

Although Senate Democrats are hoping to pass the bill, so it can move to the U.S. House and land on President Joe Biden’s desk in the near future, hurdles still exist.

The Department of Justice issued a memo raising questions about the banking legislation, citing a lack of precise language around what is considered a legitimate cannabis business, among other concerns.

Nevertheless, a DOJ official believes the bill could be effectively implemented with some minor changes.

Optimism that the bill, which has passed the House six times already, could finally become law helped Tilray to regain the 200-day simple moving average (SMA) as support, effectively throwing the stock into a new bull market.

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The Tilray Chart: Tilray hasn’t closed a trading day above the 200-day SMA since July 13, 2021, and has therefore suffered a long bear market. The 200-day SMA is an important bellwether indicator that indicates whether a stock is trading in a bull or bear cycle over the longer term.

• Although Tilray only crossed above the 200-day on Friday, the stock has been trading in a strong and confirmed uptrend since Sept. 26, with the most recent confirmed higher high formed on Nov. 15 at $4.89 and the most recent higher low printed at the $3.59 mark on Nov. 22.
• When Tilray reached its high-of-day of $5.12 on Monday, the stock’s relative strength index (RSI) was measuring in at about 71%, which brought in selling pressure. When a stock’s RSI reaches or exceeds the 70% mark, it becomes overbought, which can be a sell signal for technical traders.
• If Tilray closes the trading session with a long upper wick, the stock will print a shooting star candlestick, which could indicate lower prices will come on Tuesday. If that happens, bullish traders can watch for the stock to retest the 200-day SMA as support and possibly print a bullish reversal candlestick above the level.
• If buyers come in later on Monday and cause Tilray to close near the high-of-day price, the stock will print a bullish Marubozu candlestick, which could indicate higher prices are in the cards. The second most likely scenario, in that case, is that Tilray will print an inside bar candlestick to consolidate the recent surge and bring the RSI indicator lower.
• Tilray has resistance above at $5.15 and $5.90 and support below at $4.71 and $4.24.

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