Cameco Shares Rebound 3.98% from 4.82% Drop as Bullish Reversal Patterns Emerge

Cameco (CCJ) closed the most recent session with a 3.98% increase, driven by a sharp rebound from the prior day’s -4.82% decline. This price action forms a potential bullish reversal pattern, characterized by a long lower shadow and a narrow-range candlestick, suggesting buyers regained control after a sharp sell-off. Key support levels appear to congregate around the $109–$110 range, while resistance is evident near $114–$115, where the price has tested twice in the past week. The recent consolidation above the $110.82 intraday low strengthens the case for a short-term bullish bias.

Candlestick Theory

The price action over the past five trading days reveals a "bullish engulfing" pattern, with the most recent candle fully engulfing the preceding bearish candle. This pattern typically signals a shift in momentum. Additionally, the price has formed a "triple bottom" near $109–$110, with each bounce showing increasing volume, reinforcing the likelihood of a breakout. A break above $114.07 (the recent high) could target the next resistance at $116.44, aligning with prior Fibonacci retracement levels.

Moving Average Theory

The 50-day moving average (approximately $105–$106) is currently below the 200-day MA ($100–$101), indicating a bearish intermediate-term bias. However, the 50-day MA has been trending upward, suggesting short-term strength. The price’s recent retest of the 100-day MA ($108–$109) acted as a dynamic support, validating its role as a potential floor. If the 50-day MA crosses above the 100-day MA in the coming weeks, it could signal a broader trend reversal.

MACD & KDJ Indicators

The MACD histogram has turned positive after a prolonged bearish phase, with the MACD line crossing above the signal line—a bullish crossover. However, the KDJ stochastic oscillator shows the RSI at overbought levels (>70), with the %K line diverging from the price action (a bearish warning). This divergence suggests caution: while momentum is improving, there is a risk of a pullback before a sustainable upward move.

Bollinger Bands

Volatility has expanded significantly in recent sessions, with the price nearing the upper Bollinger Band ($114–$115). This proximity to the upper band, combined with a contraction in band width earlier in the week, indicates a potential breakout scenario. A sustained close above the upper band may trigger further gains, but a retest of the lower band ($106–$107) could occur if the move proves to be a false breakout.

Volume-Price Relationship

Trading volume surged on the most recent 3.98% rally, with over 4.49 million shares traded, compared to an average of 4–5 million in the prior week. This volume surge validates the strength of the bullish reversal. However, volume has been mixed in the preceding days, with higher volume during declines, suggesting lingering bearish sentiment. A continuation of above-average volume during upward moves would strengthen the case for a sustained rally.

Relative Strength Index (RSI)

The RSI has entered overbought territory (>70) following the recent rally, but this is not uncommon in strong uptrends. The 14-day RSI shows a bullish divergence, with prices making higher highs while RSI troughs are stabilizing. This suggests the uptrend may persist despite the overbought reading, though a pullback to the 50–60 RSI range is probable before further gains.

Fibonacci Retracement

Applying Fibonacci levels between the recent high ($128.145) and low ($109.00) reveals key support/resistance at $114.07 (38.2%), $112.35 (50%), and $110.82 (61.8%). The current price near $113.63 is within the 38.2%–50% range, a zone where traders may expect a consolidation or reversal. A break above $114.07 could target $116.44 (the prior high), while a breakdown below $112.35 would invalidate the near-term bullish case.

The confluence of bullish candlestick patterns, a positive MACD crossover, and Fibonacci support at $114.07 suggests a high probability of a short-term rally. However, the overbought RSI and bearish KDJ divergence highlight risks of a pullback before the trend resumes. Volume confirmation will be critical to differentiate between a genuine breakout and a false signal. Traders should monitor the $110.82 level as a key support; a breach below this could reignite bearish momentum. While the 50-day MA trend remains bearish, its upward trajectory may align with the price to confirm a broader reversal in the coming weeks. Divergences between momentum indicators and price action underscore the need for caution, particularly in a volatile environment.