URRE Update

URRE has been a long time favorite on the watchlist as many of you know, there are some fundamental reasons such as legislation passed that makes it virtually impossible for any new power plants using even clean coal technology to be built, leaving a nice space for companies like URRE.


I think there are two things going on generally speaking in URRE, first as the chart below shows, there's a larger base that has made URRE such an interesting long term play or idea.

You can see a clear transition from a stage 4 decline to a stage 1 base and a clear change in character not only in price, but volume as well.

The second thing is closer to home so to speak, that's the chart below depicting a Descending Triangle, which is interesting because technical traders see the price formation and a descending triangle is a bearish consolidation with the continuation moving lower as URRE has done, even the volume on the chart is exactly how it should look according to all of the Technical Analysis textbooks.

 This pattern is too clear, clean and obvious to be organic, it looks to me to be clearly engineered, so a break below it is not surprising at all as that is exactly what technical traders are expecting and looking for to enter short trades, puts, etc.

We can even see the stop levels hit as URRE moved lower through support and different stop levels.

Note the volume as different support levels are taken out, to the far right at the white arrow the candle and volume look like a short term capitulation event which may mark a minor bottom.

This 3 min chart shows some moderate accumulation since the day of the first break below support, 4/28, however this is not enough in my opinion to be a completed reversal process, in fact I'm not even sure it's starting a reversal process, I just know the longer term charts look great, and this triangle looks definitely purposeful.

When I see something like this I expect this kind of a move and I suspect there's a very clear reason it was put there and executed in the first place. 

The base is large, this is not something that is a set up, it looks to be a clear stage 1 accumulation area, so activity inside it is meant to accumulate. What better way is there to accumulate if you are a large firm that trades positions that are millions of shares in size? 

You create a scenario in which you not only get the asset at a lower price, but you have automatic supply available that allows you to accumulate without raising any suspicions, allows you to accumulate in the kind of size you need to without moving price against your position and allows you to trap bears and create momentum on an eventual upside reversal as the bears are caught in a trap and eventually forced to cover creating a short squeeze. The short squeeze creates the kind of upside momentum that causes other traders to step in and become buyers at higher prices, typically as price moves back above the descending triangle as it is then seen as a failed move. This additional demand/buying is putting you at a profit and keeping the momentum going without having to expend any resources, all the while no one is hip to anything you've done. The set up is there.

From here we know exactly what to look for, the evidence of a head fake move which would be accumulation showing up on 3C intraday charts and strengthening. We are also looking for a reversal process of the actual head fake move below the descending triangle's support ( accumulation and the reversal process are one in the same). Here's today's close.

You might recognize the daily closing candle as a bullish Hammer (reversal candle) and we have increasing volume, it doesn't need to be huge, but when it's larger than the previous day, these candles tend to be more important and more effective.

So I think URRE is a very interesting position and has moved in to a potentially very interesting position. There are numerous ways to play it, perhaps to wait for the initial momentum of the short squeeze and eventual longs coming in and take gains there before the breakout from stage 1 as there will be resistance and some fooling around near resistance of the larger stage 1 base or  you can look at this on a much larger time horizon as a long term trend trade or what many would view as an investment, but either way, I think it's just a matter of patience, letting this process play out. We know what to look for in price and 3C, as we see it, the trade has come to us on our terms at much better prices and much lower risk with the best timing we can ask for.

I have little doubt this will be a long term long position, take a look at the 3C accumulation on the daily chart, one of the strongest underlying signals we have and the highest trend probability...

This daily URRE chart shows 3C (orange) in a leading positive divegrence on a very strong timeframe marking a very powerful underlying trend. This base is so large right now that it can easily support a primary bull market trend for URRE and it's not even done forming yet.

Of course we have to watch the charts and see what is happening as we move forward; many of our concepts are fractal in nature so the large stage 1 base may see a head fake move below the base (around the $2.20 area) before the move to stage 2 begins, but we let the market tell us that, we just know that the larger head fake is a probability when we have defined support/resistance levels and a stage 1 base this size.

If we don't see increasing, definitive accumulation on the short term charts from 1-10 mins over the next few days, then the probability of a head fake move on the entire stage 1 base becomes very high probability, but there are two sides to that coin, the head fake move of a stage 1 base this large would mean URRE is getting ready to move to stage 2 rather than a swing trade within the stage 1 base. For now I would remain patient and probably not enter here until we see which way this is most likely to go.

I REALLY think this is one that is worth waiting for.