FCX: Quadruple Validated Resistance

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Last we looked at the FCX daily chart, we were looking to see if the stock could put in a low for Data Point #4 of a pattern, from which it could break out to the upside. We got Data Point #4, but the best that FCX could manage was a rally to the bottom of Kumo (Cloud) resistance where it failed, then broke below Trendline #2-#4. UGH.

Since the breakdown of Trendline #2-#4, we've had FOUR validations of resistance (the four red arrows) at that trendline, the most recent of which was on Friday. At the second one, FCX opened just about smack on the trendline. poked its head above it, then tanked to a new low for the year. UGH.

When the trend is solidly bearish as it is in FCX, the intraday charts can be helpful in showing us what's going on, so let's take a look at the Hourly chart.





Pattern #1 - H&S Top - the neckline was a bit off (the horizontal white line), but the net effect when FCX broke the 54.00 level was a H&S Top. KEY SUPPORT at 53.00 in the daily chart got broken, and down she went.

Patterns #2 and #3 - The Ascending Triangle (#2...in white) that morphed into the Rising Wedge (#3...in red) and broke down on the fifty cent dividend payout at the open on May 11. Those pattern morphs can be deadly, as we've seen when SLW broke down below a pattern morph at 44.44 on April 11.

Pattern #4 - Symmetrical Triangle (in blue). The breakdown sent FCX to a new low for 2011.

Pattern #5 - Bull Flag. Did we say BULL Flag??? Oooo-oo...that's nice. The Bulls finally have done something bullish here ;)

If The Bulls can capitalize on Friday's bullish breakout, that suggests a move up at least toward the dividend gap (horizontal lines, in yellow). Let's look at that Bull Flag breakout a little more closely.



I hesitated to put the 13, 21, and 34 day exponential moving averages (EMA's) on the chart because I'm not fond of moving averages. They can be terribly misleading for reasons that I've posted numerous times in the past, but there you have it. FCX currently is sitting just above those three EMA's at the moment, as we can see in this chart.

The Hourly chart is constructively bullish, poised to move higher. If I were coaching The Bulls, I would have them go down and tag the top of the Bull Flag (pattern in green) on Monday morning, establishing "former resistance as support," then rally like gangbusters above Trendline #2-#4 resistance in the first chart above which, again, is QUADRUPLE validated resistance.

A selloff to the EMA's, then an upside takeout of Friday's high also would be very nice. A move back down inside the Bull Flag would be sloppy ("Ye Olde Knuckle-biter"). A move below Green #4 would be...UGH.