Cameco Corp (NYSE:CCJ) Shows Strong Technical Setup for Potential Breakout

For investors focused on technical analysis, identifying stocks with both good underlying momentum and a clear entry point is a foundation of many strategies. One method involves screening for stocks that score well on two specific metrics: the ChartMill Technical Rating, which reviews the general condition and trend of a stock, and the ChartMill Setup Quality Rating, which examines the state of its current consolidation pattern. The aim is to find technically sound stocks that are tightening, possibly ready for their next move up. A recent scan using this approach has pointed to Cameco Corp (NYSE:CCJ) as a candidate fitting these strict conditions.

A Good Technical Base

The main filter in a breakout screen is a high Technical Rating, which confirms the stock is in a definite uptrend and showing good relative performance. This is important because trading breakouts in poor or flat stocks involves much greater risk. According to the detailed technical report, Cameco receives a rating of 8 out of 10. This score is backed by a few main points:

• Trend Direction: Both the long-term and short-term trends for CCJ are rated as positive. This agreement across timeframes points to continued buying interest and a good chart formation.
• Moving Average Position: The stock is trading above all its main simple moving averages (20, 50, 100, and 200-day), and each of these averages is itself in a rising pattern. This establishes a sequence of moving support levels under the price.
• Market and Sector Performance: The report states that CCJ is doing better than 96% of stocks in its industry (Oil, Gas & Consumable Fuels) and has performed better than 92% of all stocks over the last year. This relative performance is a sign of market leadership, an important feature for good breakout candidates.

This mix of a positive multi-timeframe trend, good moving average position, and sector-leading performance creates a firm technical base, addressing the key question of which stock has the momentum to maintain a possible breakout.

A Good Setup Pattern

A strong trend by itself is not a buy signal; entering after a sharp, long move frequently results in buying at a high. This is where the Setup Quality Rating is important, spotting when a stock might be prepared for a new rise. Cameco's Setup Rating of 8 shows it is currently making a good consolidation pattern.

• Lower Volatility and Tightening: The stock has been trading in a set range between about $84.29 and $96.57 over the last month. Lately, this range has become narrower, with price action consolidating. This lessening of volatility often comes before a clear move.
• Clear Support and Resistance: The technical analysis marks out a nearby resistance area around $95.74 and a support area between $90.34 and $92.37. These clear levels give specific reference points for planning a trade, allowing for a reasoned entry above resistance and a protective stop-loss below support.
• Nearness to Breakout: With the last price at $92.84, CCJ is trading near the top of its recent range and close to the noted resistance. This location is typical of a stock that is "setting up" for a possible breakout, as it tests a main level that, if passed, could start more buying.

Trade Points and Market Setting

The automated analysis proposes a possible trading setup with an entry just above the $95.74 resistance at $95.75 and an initial stop-loss just below the support area at $90.33. It is worth noting that the space between this entry and stop is fairly small compared to the stock's average daily movement, as measured by its Average True Range (ATR) of about 4.07%. Traders might want to modify these levels to match their own risk comfort, possibly using a wider stop for a longer-term position.

This setup appears within a generally good broader market, where the S&P 500 keeps positive long-term and short-term trends. While CCJ itself is noted as slightly behind the market's recent highs, its good independent trend and sector-leading relative performance make it a stock to monitor on its own terms.

Finding Other Opportunities

The method that found Cameco's setup can be used each day to find new possible breakout candidates. For investors wanting to see the current list of stocks with high Technical and Setup Ratings, the Technical Breakout Setups screen is refreshed often with new results.

---

Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer or request to buy or sell any securities. The trading setup discussed is created automatically and is for example. Always do your own research, think about your risk comfort, and talk with a qualified financial advisor before making any investment choices. Past results do not guarantee future outcomes.