I'm really enjoying myself co-hosting the MarketWatchers LIVE webcasts Monday/Wednesday/Fridays at 12:00p - 1:30p EST. On Mondays and Wednesdays in this blog, I'll pick up an interesting topic or chart to elaborate on. I have to thank one of our Twitter followers for this pick. We had some time at the end of Tom's regular "Ten in Ten" segment (10 charts annotated in 10 minutes!) to take a few viewer requests. Uranium came up. Tom took a look and then I did a DP style review. I am impressed with this viewer pick and here's why.
I realize there is a lot going on in this chart, so I'll take it slow. Let's start with price. Today's trading all occurred above declining tops line resistance--a nice breakout. Next, I see a possible double-bottom formation. These are bullish patterns so you should expect a break above resistance at the "neckline" drawn from the price top in the middle of the "W". With this pattern we can measure the height to produce a minimum upside target. In this case, the target would be right around $17, IF we see the breakout above the neckline.
There are a few more positives on this chart. The PMO is just about ready to trigger a Short-Term Price Momentum Oscillator (PMO) BUY signal. Additionally, I see a positive divergence between OBV and price bottoms. The SCTR has been laying comfortably above 75, putting it in the "hot zone".
Words of caution: The pattern has not executed, nor have we actually gotten the BUY signal. The DP Intermediate-Term Trend Model is on a Neutral signal (20-EMA < 50-EMA > 200-EMA), as is the DP Short-Term Trend Model (5-EMA < 20-EMA > 50-EMA).
Another word of caution looking at the weekly chart. We have a very overbought PMO right now. It is on a BUY signal and decelerating in an attempt to avoid a negative crossover. Even if the PMO starts moving higher, it is so overbought. With this dichotomy between the daily and weekly chart, I would likely consider this more of a short-term trade.
Technical Analysis is a windsock, not a crystal ball.