The psychedelics sector is looking ready for a reversal. We are just waiting for the breakout confirmation. Earlier this week, we discussed how the bottom is in for cannabis from a technical perspective. Given all the broader market fear and choppiness, it is quite the bullish sign that cannabis is still holding onto its gains. The uptrend remains intact.
My thinking is as the geopolitical risks fade away, more of the retail crowd will come back. A lot of them will be looking at cheap small caps. And trust me, a lot of my retail friends have talked to me about investing in cannabis and psychedelic stocks. Both of these spaces are bound to reverse if this money comes in.
If a psychedelic bottom is coming, which I will cover in just a bit, then it is prudent to look for setups that are near support, or have a nice technical set up to work with.
Enter Mydecine Innovations Group (MYCO.NE) a biotechnology company developing innovative first- and second-generation novel therapeutics to treat unmet needs in mental health and addiction disorders. Focusing on psychedelic compounds and other novel molecules with therapeutic potential, the Mydecine business model combines world-class technology and drug development infrastructure with clinical trials and data outcome. By collaborating with some of the world’s foremost authorities, Mydecine aims to responsibly fast track the development of novel medicines to provide patients with safer and more effective treatment options.
Be sure to check out our deep dive and Investor’s Roundtable on more in depth coverage of the company. We like that the company is executing and doing things including working with top organizations. Mydecine had a great 2021. Here are some of their accomplishments:
2022 is shaping up as a big year, and I believe it will also be one for shareholders.
First of all zooming out, I want to show you the broader picture on the Mydecine chart. We are pretty much close to the record all-time lows. Technically, these are zones that tend to see a lot of bottom pickers and a bounce. You buy at support, and what bigger support than previous record lows?
Once we zoom in, you can see that the major support is close by at $0.125. I am really looking for bids to come in either at that support, or close by. The candle on February 15th 2022 hinted at this, as we got a green candle with a large wick with a volume of 861,554 shares traded. Notice how earlier this year we ranged at $0.125 before breaking out. Similar sort of price action would be preferred. Bulls want to be buying at this support using $0.125 as the bottom and the platform for the next move higher.
Mydecine definitely has upcoming catalysts for 2022 which can get the stock bouncing from this support. I will be watching for that Nasdaq listing myself.
As the stock hovers around support, a bump in psychedelics could get the stock really moving. A brand new uptrend for the sector would mean a new uptrend for Mydecine. So lastly, let’s take a look at the psychedelics ETFs.
Both PSIL and PSYK still have not broken above levels which I highlighted in my article, “Is it Time to Buy the Dip in Psychedelics“. PSYK still has the arrows highlighting the price action I want to see, but note how we just cannot get a close above $4.50. The stock keeps selling off there meaning the uptrend reversal signal has not triggered.
PSIL cannot close above $5.00 and the range keeps on forming. Again, a potentially positive sign as ranges indicate bottoming. But that breakout is still required for a new uptrend to initiate.
If both of these ETFs breakout, we have a reversal in psychedelics, and a stock like Mydecine looks well positioned for this hovering near support.
