Fundamentals for uranium look great

August 29, 2016 02:28 PM

By any estimate, the uranium market is trading in the extremely oversold ranges, but when the trend is down, a market can trend into the extreme of extremely oversold ranges, and we have seen this occur many times in the past.  The 15-year chart illustrates that the next layer of support comes into play in the $21.50-$22.00 ranges per pound, so despite being extremely oversold the market still has room to trend lower. One positive is that the trend is about to turn neutral and if it does it would be the first move into the neutral zone in a very long time. 



Taking a long-term view; a monthly close above $35 per pound would be needed to indicate that a multi-month bottom is in place.  From a contrarian perspective, uranium would start to look quite tempting at any level below $23.00 per pound. 


 

On the five year chart, uranium is has broken through former support ($27.50-$28.00) now turned resistance and it appears that almost all the ingredients are in place for a test of the $21.50-$22.00 ranges.

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About the Author

Sol Palha, with Tactical Investor, is a self-taught student of the markets and provides compelling insights into the markets by combing the key elements of mass psychology with the supreme elements of technical analysis. He has been studying the markets for over 18 years.