Image Source: PexelsAt the beginning of the week, we witnessed a great success that quickly turned into a failure. Despite the tremendous success in shaping a fresh multi-year high, the bulls have failed to maintain their gains. What are the technical implications of this? What can we expect to see in upcoming sessions?I invite you to today’s analysis, where you will find the answers to these questions.Let’s start with a quote from a previous article:

“…the stocks of the world’s largest publicly traded uranium company have… reached significant resistance based on the June 2007 peak.

“As prices rose, the RSI moved into its overbought area, which in 2007, 2021, and March 2022 cases preceded a correction of the earlier northward march. Very high levels of CCI were also a motivating factor for the bears to be active.

“In addition, the Stochastic Oscillator has risen to its highest level since February 2011! When we look at the chart, we see that this was the moment before the very strong market reversal and sell-off…”

The first thing that catches the eye on the monthly chart is a tiny breakout above the June 2007 peak, as well as a fresh multi-year high of 46.95. Although this was a very bullish signal, the buyers didn’t manage to hold onto these levels.All of the technical factors mentioned above encouraged the bears to act (as expected), which resulted in a reversal and a quick invalidation of the earlier breakout, which, in combination with the current position of the indicators, doesn’t bode well for the bulls at the moment.

How Did this Price Action Affect the Medium-Term Picture?
Before we examine the weekly chart, let’s recall what the stock’s situation was like previously.

“…the CCJ has risen above the upper border of the blue triangle, and in the not-too-distant future, the bears may want to realize the gains made in the previous months (as a reminder, in this area, the minimum size of the upward movement will be equal to the height of the triangle, which from the point of view of technical analysis may be discouraging to realize profits).

“This is especially true if we also take into account the fact that, not far from current levels, the size of the upswing would be equal to the size of the consolidation marked on the daily chart below in orange.”

Looking at the charts, we can see that the price reached its upside targets as expected over the previous weeks. A fresh multi-month peak that was hit at the beginning of December encouraged buyers to take some profits off the table, which translated into a pullback and a comeback to the previously broken upper line of the consolidation in orange.This support, in combination with the late November lows, encouraged bulls to climb higher once again. However, as mentioned earlier, buyers failed to keep the price above the 2007 high for long.As a result, the stock dropped not only under the 2007 peak, but also below the previously broken upper border of the black rising trend channel (marked with dashed lines on the weekly chart), the red rising line, and the blue support line based on November and December lows (seen on the daily chart), which opened the way to lower levels.Additionally, a significant red candle was formed on huge volume on Dec. 19, which, in combination with the previous white candle, created a pro-declining bearish engulfing candlestick pattern, which serves as an additional resistance, blocking the way back to the north.Thanks to this drop, the CCI and Stochastic Oscillator generated sell signals (not only on a daily basis, but also on a weekly basis), which suggests that further deterioration may be just around the corner.

How Low Could the Stock Go in the Coming Days?
In my opinion, the first downside target for sellers would be the nearest support zone (marked with blue rectangle) created by the 38.2% Fibonacci retracement (based on the entire October-December upward move), the 50-day moving average, the previously broken September peak, and the green rising support line based on the previous lows (the lower border of the green rising trend channel), which together could encourage the bulls to come back to the trading floor and fight with the bears.At this point, it is worth noting that the CCI and the Stochastic Oscillator dropped to their lowest level since the beginning of October. When we take a closer look at the chart above, we can see that a lower reading of the indicators preceded a reversal, which, in combination with the above-mentioned support area, suggests that the space for declines may be limited (at least in the very short-term).Nevertheless, such a scenario would be more likely only if we actually see the bulls’ strength in this area (confirmed e.g. by maintaining a lower border of the green rising trend channel).

What Could Happen If They Fail?
We’ll likely see further deterioration and a test of the next support zone created by the 61.8% Fibonacci retracement, reinforced by the upper border of the big green gap (formed on Oct. 31) and the Nov. 7 low.Summing up, although the stock hit a fresh multi-year peak, bulls failed to push the price higher, which triggered a reversal and a correction. Despite recent downward move, buyers stand a chance of stopping further declines as the first important support zone is just around the corner.Finishing today’s article, I wish all my readers a wonderful holiday season.More By This Author:Uranium Bulls; Where Are You?