Cameco Corp (NYSE: CCJ) seems to be poised for a price surge as per its latest charts. Cameco Corporation produces and sells uranium. It operates through two segments, Uranium and Fuel Services.
The Uranium segment is involved in the exploration for, mining, and milling, as well as purchase and sale of uranium concentrate. The Fuel Services segment engages in the refining, conversion, and fabrication of uranium concentrate, as well as the purchase and sale of conversion services.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color lines. A breakout from this pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
CCJ – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below –DI and +DI lines. This indicates possible bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#6 Symmetrical Triangle Pattern Breakout: The weekly chart shows that the stock had recently formed a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked as purple color lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move. Currently, the stock has broken out of the symmetrical triangle pattern which is a possible bullish sign.
CCJ – Weekly Chart
#7 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of CCJ above the price of around $29.40. Alternatively, you can purchase the shares of CCJ if it corrects to the price of around $27.50.
TP: Our target prices are $35 and $40 in the next 3-6 months.
SL: To limit risk, place stop-loss at $26.00 (for entry near $29.40) and $23.00 (for entry near $27.50). Note that the stop-loss is on a closing basis.
Our target potential upside is 19% to 45% in the next 3 to 6 months.
- Entry near $29.40: For a risk of $3.40, our target rewards are $5.60 and $10.60. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $27.50: For a risk of $4.50, our target rewards are $7.50 and $12.50. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the ascending triangle pattern with a high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
— Tara
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