Looking at the chart on the left which is a daily MSOS chart, the first thing that stands out is how price is finally starting to push through the downtrend line that’s been in place since the October highs. This is the first sign of developing strength we’ve seen in a while, but for the momentum to truly shift back to the upside, MSOS still needs to close above that key $4 level. A breakout through that area would confirm that buyers are finally stepping back in and that this downtrend may be coming to an end.
On the right side of the screen is a daily chart of CURLF, and there are two important takeaways here. First, CURLF has closed above its own downtrend line which puts CURLF in a stronger technical position. But what really grabs my attention is the lower pane, where I plot a relative strength line of CURLF versus MSOS. That RS line has already broken out to a new high. If you’ve followed my work, you know how important relative strength is in my trading approach. I've written about this concept many times but for further review you can check out this post: Using Relative Strength in Trading: A Key Tool for Market Outperformance
The fact that CURLF is showing relative strength before the broader cannabis ETF turns up tells me one thing: CURLF is starting to take on a leadership role. If MSOS can get moving, I expect CURLF to be one of the names leading the way. Stay tuned.
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