FCX: Ascending Triangle Breakout Thru Quintuple Resistance

Referring to Thursday's trading:

"What I was seeing in the chart was horizontal resistance at about 55.50 and the inverted, declining Exponential Moving Averages (Fibonacci 13, 21 and 34) up at the same area, the highest of which (the 34) was around 55.47. Given how unacceptably (to me) FCX was performing on "good news," I shaved my expections a bit and threw the trade in at 55.42, below 55.47-55.50 resistance"

That 55.50 area became Quintuple resistance (the five white down arrows). Notice that after the selloff from the fourth attempt to get through resistance, the stock held at the 13, 21, 34 Exponential Moving Averages (EMA's), which now were "in gear." If you look at yesterday's intraday chart, at where I sold into the inverted EMA's, the faster 13 was below the 21, and the 21 was below the 34, indicating that the near-term trend was down.

While FCX was trading sideways on Friday, below the Quintuple Resistance in the chart above, and while it also was forming an Ascending Triangle, the EMA's had a chance to flatten out and get "in gear," meaning that the EMA's became properly threaded, with the fastest 13 above the 21, and faster 21 above the 34. I bought FCX at 55.34, coming off that bounce (up arrow) off the EMA's.



When the stock broke out, my initial target was the 55.90, below the 55.91-55.92 lows (the horizontal yellow line) of the Decending Triangle (pattern in yellow). That Descending Triangle broke down in Thursday morning trading after the release of earnings, putting 55.16 IN PLAY, which in addition to the gap at 55.12, was why I bought FCX on Thursday at 55.15, expecting that area to be support. As we know, it wasn't support, which is why I threw the trade in for a $675 gain, below the 55.47 - 55.50 resistance.

Math for the Descending Triangle:

56.68 - High of the pattern
55.92 - The more conservative of the 55.92-55.91 lows (it's fine to use 55.91)

56.68 - 55.92 = 0.76 points of downside on a breakdown

55.92 - 0.76 = Target: 55.16 IN PLAY, which got MADE a penny above my Thursday entry, at 55.15.

Regarding the Ascending Triangle breakout through Qunituple Resistance, in addition to the target of 55.90 (Descending Triangle Resistance), 56.23 also is IN PLAY.


Math for the Ascending Triangle breakout:

55.50 - the most conservative of the five highs of the pattern (five down arrows)
54.77 - low of the pattern

55.50 - 54.77 = 0.73 points of upside on a breakout

55.50 + 0.73 = Target: 56.23 IN PLAY

As we can see from this second chart, the move up in FCX after the breakout was a slow, grinding affair on low volume. YAW-W-W-WN... The afternoon should have been a slam dance at least to 55.90 resistance (horizontal yellow line), but it became a war of attrition between The Bulls and The Bears to see who could bore the other to death first.

I'm a-gittin' old, and by 3:30PM, I not only was bored to death, after seeing that The Bulls had all afternoon to get to 55.90, and seeing the possiblility of the stock rolling over to the downside into the close and my paper gain evaporating, I sold at 55.66.

I don't like excuses for that kind of miserable performance from The Bulls on an Ascending Triangle breakout through Quintuple resistance, but there at least was a technical reason for Friday afternoon's war of attrition...



...which was the battle for control at the top of the 2011 Falling Wedge in the daily chart. That top trendline came in on Friday at 55.636, so The Bulls pulled off a victory at the close of 55.67, albeit on a squeaker ;)

The Ascending Triangle targets of 55.90 and 56.23 remain IN PLAY as long as FCX trades above 55.50. Anything below that is "Ye Olde Knuckle-Biter" for The Bulls. Anything below the rising line of the Ascending line is a failure of that particular pattern, which could end up morphing (changing) into something else later on.

The upside targets listed on this daily chart are back IN PLAY, as long as FCX trades above the pattern. Anything back below it is "Ye Olde Knuckle-biter" again.




Gain on the FCX trade: $800