The nuclear energy industry scored a win yesterday when the Osaka High Court ruled to remove an injunction that has been in place since March 2016 preventing Kansai Electric Power Co. from running the No. 3 and 4 nuclear reactors at its Takahama facility. The high court ruling opens the door to a faster timeline for the Abe administration’s goal of full nuclear restarts.

The uranium equity sector has had a dreary six weeks since peaking in mid-February, however, there is a distinct possibility that this sector as represented by URA just experienced a failed breakdown:

URA (Daily)

A marginal break below previous support (~$15.25) followed by an upside reversal offers the possibility of a 'failed breakdown' which can often lead to strong upside moves. This particular setup in URA appears to be especially powerful due to the bullish divergences in Relative Strength (RSI) and the Money Flow Index (MFI). In addition, the breakdown took place on relatively light volume which could indicate that the market was 'sold out' - there weren't many motivated sellers even as price broke a clear level of support. 

I am long URA as of today's trading session (March 28th) and I view the risk/reward from this setup to be particularly attractive (risk of ~3%/reward of 10%-15%).


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