FCX: Rally To Resistance

From last week:

"The Ascending Triangle breakout puts an upside target of 52.28 IN PLAY.

Math For The Ascending Triangle:

49.17 - (The more conservative of the 49.17 and 49.19 highs)
46.06 - (Low of the pattern)

49.17 - 46.06 = 3.11 points of upside, added to 49.17.
49.17 + 3.11 = Target: 52.28 IN PLAY.

Anecdotally, it's interesting that the 52.28 target is so close to where the Bearish Rising Wedge terminated on May 10: 52.30."

The Bulls did an excellent job last week, rallying from a low of 46.67 on Monday to a high of 51.90 on Friday, very near the Ascending Triangle target of 52.32 that is IN PLAY.

Notice that there were a number of strong technical factors supporting the rally and that it wasn't just some "random walk" higher. The better "the body of evidence" for any rally or selloff, the better the chances are that it will occur.

The Body Of Evidence For Last Week's Rally:

1. In the prior week, The Bulls put in a Bullish Evening Star, one of the most bullish patterns in the candlesticks.

2. Basis the intraday charts, Tuesday's gap up opening left all of Monday's trading as a Bullish Island Reversal in the charts (see chart posted last week for a visual on that).

3. Wednesday's gap up opening was a gap back inside the BIG blue Falling Wedge. Whenever trading occurs that is back inside a pattern that has broken out or broken down, it always is a "knuckle-biter" for the team that is expecting a continuation in the direction of the breakout or breakdown.

In this particular case, Wednesday's gap up opening was a "knuckle-biter" for The Bears, who were expecting a downside continuation from Quintuple Resistance (the red arrows), after the technical breakdown of the BIG blue Falling Wedge, on May 11.

4. Wednesday's gap up opening quickly turned into a lot more than just a "knuckle-biter" for The Bears. It also was a technical breakout of an Ascending Triangle, crossing above the 49.17 - 49.19 highs of that pattern.

5. When FCX printed 49.51 on Wednesday, ALL of the highs of "Quintuple Resistance" had been taken out to the upside. When validated support or resistance gets taken out, that usually has "some" significance. We can see that, indeed, it did.

There were additional bits of evidence from technical indicators, like the MACD, and from intraday patterns in the charts, but these factors alone were pretty powerful evidence of some kind of rally toward the Ascending Triangle target of 52.28 and toward the top of the Falling Wedge.

Near-term Resistance:

Despite that body of evidence for a rally, The Bulls aren't out of the woods. There's some serious nearby overhead resistance with which they must contend:

1. 52.30 - that was the May 10 pre-dividend distribution high of the rally off Blue Data Point #4 that failed, just below the bottom of Kumo (Cloud) resistance.

2. 52.475 - the bottom of Kumo (Cloud) resistance, currently

3. 52.665 - the top of the Falling Wedge (Trendline #1-#3). The downward slope of that trendline is 0.17385, so we subtract that amount each session to determine the location of that trendline.

We'll see what The Bulls can do here, given that resistance.

Chart Structure:

A few comments on that subject, since we've got a good example here.

Beginning with the HUGE white candle on March 15, notice that all of the moves in FCX have been pretty much straight up and straight down. The straight up rally off Blue #4 didn't get very far since the stock banged its head on Kumo (Cloud) resistance.

The Ascending Triangle formation, below the bottom of the Falling Wedge, is the type of thing to which I am referring when I say, "I'd like to a nice structural foundation for a rally" or "I'd like to see a base formation from which to launch a rally."