FCX: 2011 Falling Wedge Breakout

Since mid-May, FCX has exhibited a penchant for breaking out of patterns through multiple iterations of validated resistance:

Ascending Triangle Breakout Through Quintuple Resistance (May 25)

The Ascending Triangle is the pattern formation below the five red arrows. Although the pattern was rather skimpy, notice that the Bullish Morning Star and the Bullish Island Reversal candle were "nested" within the pattern. Those were indications that if the stock could break out through QUINTUPLE Resistance, it could be packing some punch on the upside, and indeed, it was.

RESULT: FCX went on a four-session successive Gap Up screamer and the 52.28 Ascending Triangle target got MADE with no problem. The rally ended at 52.70, within four cents of the top of the Falling Wedge that began on April 8 (Black Trendline #1-#3), for the first validation of that trendline as resistance.

Triple Breakout Through Triple Validated Resistance (June 28)

There were two more validations of resistance (red arrows) at the top of the April 8 Falling Wedge, which also were the highs (Purple #1 - #3) of a "nested" Symmmetrical Triangle (pattern in purple). The Falling Channel, in blue, was another "nested" pattern within the Falling Wedge.

As with the Bullish Morning Star and the Bullish Island Reversal in the May Ascending Triangle, these "nested patterns" within the much larger Falling Wedge pattern also were indications that the stock could be packing some punch if it could break out of the patterns, above TRIPLE validated resistance.

RESULT:

Six of the upside targets listed at the upper right of the chart got MADE (there were additional upside targets MADE off the intraday charts) and FCX came within eleven cents of Target #7 (56.49) in yesterday's breakout rally, seen in the next chart.





Falling Wedge Breakout Through Triple Validated Resistance

Yesterday's breakout above the 2011 Falling Wedge was the third time in two months that FCX has broken out of a pattern through multiple validations of resistance. While there ALWAYS is a chance that any breakout "could be" a Fakeout/Breakout, that isn't a problem here if we've been "taking at least 'some' profits" as all of the pattern targets have gotten MADE, and there have been a bunch of them!

The first indication of any problem with this breakout would be "Ye Olde Knuckle-Biter," which would be a CLOSE back below the 2011 Falling Wedge, the top of which comes in today, July 20, at 50.704. The downward slope of that trendline is -0.04325 (a little over four cents), so subtract that amount each session to locate the trendline.

Technical analysis isn't rocket science, so we can't expect exactitude. After yesterday's Gap Up technical breakout, for example, FCX pulled back to see if "former resistance would act as support," as it should. The 55.65 low was about ten cents below the trendline, then the stock rallied to a new high on the session. That was a a validation of support at the top of the pattern. Those waiting for more of a gap fill from Monday's 55.05 close to buy, or to buy to cover their short position, didn't get the chance.

The upside targets listed on this chart are IN PLAY as long as FCX remains above the top of the 2011 Falling Wedge on a CLOSING basis.