Charles Moon: Kush Bottles Inc. Upside Potential

Kush Bottles Inc. (OTC:KSHB) is an American company that sells wholesale packaging and bottling products to producers and distributors of cannabis products. They recently acquired Summit Innovations, a distributor of Hydrocarbon gases to legal extractors in the Colorado area. This means Kush Bottles has now added another stream of revenue in a space with a lot of demand. This is a new venture as they previously only focused on paraphernalia and packaging. The response has been positive from investors and retail traders. The recent move in the stock price has only verified the upside the street sees in KSHB.

So how can we take advantage of a stock that has already made a strong move? There was a strong breakout entry on the initial breakout on April 27th. I saw the move after the fact and have had it on my radar. Then once the news came out, the stock went… sideways?? It went through a consolidation period. How I read the chart was buyers taking profits at the highs but there was enough demand to keep the stock from unraveling and breaking down past recent lows. The price channel will reflect the highest high and lowest low over the last 20 bars. If the channels continue to ascend, the channels will both move in sympathy. As we can clearly see the channels have been lifting since the initial breakout. Once the stock consolidated for a few sessions, we saw a strong breakout take place as the stock opened above resistance at the $5.80 range and immediately found support. If you have been following some of my recent articles, I have explained that this is usually is a bullish sign. Well, upon the immediate rejection, KSHB took off and went vertical on substantial volume. The volume was around 5.8x the normal 50 period average. That means 5.8x the normal average volume over the last 50 trading hours.

So a question you are probably asking now isl most likely, “Is it too late to buy KSHB?” I do not believe so but I also don’t chase. I am going to be patient for a retrace entry. Now the stock may never pullback and it could continue higher. Not much we can do about that without putting yourself in a higher risk/lower reward potential. It could very well be a higher risk/high reward opportunity but my play here will be the pullback buy instead.

Below you will see my trading chart with a red ellipse on it. The white ellipse will highlight the breakout points for the stock. The red ellipse is the pullback range I am looking for a buy opportunity in KSHB. It would be from $6.05-$5.75 and the stop would be at $5.51. Now you may widen your risk parameters based on your own risk tolerance but from a chart structure standpoint, the risk parameters I feel are proper. The short term upside is around the $7.50-$8.50 mark, but I can see the stock accelerate above these levels if the breakout momentum continues.

With retail demand still strong and businesses small and large opening everyday, KSHB has positioned itself as one of the leaders in the industry. This is a name to keep an eye on in the short term.

To learn more about Charles Moon and Prosper Trading Academy please click here.

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