FCX: Quadruple Breakout To Gap Resistance

Last week, FCX enjoyed a nice rally off the June 28 Triple Breakout through Triple Validated Resistance, during which six pattern targets got MADE. The next Falling Wedge target of 56.49 was not achieved during that rally, at least in part, due to the fact that...




...FCX ran into resistance at the top of the BIG 2011 Falling Wedge, at 56.12. Technicians watch those trendlines and the fact that it was hit within less than one penny indicates to me that traders were on it.

When there's intervening resistance like this, ahead of a target (the 56.47 target, in this case), it's not a bad idea to take at least some profits, or even to short at resistance, which I did, at 56.09, just below below where the trendline came in on July 7, at 56.12 (see real-time execution posted last week). It's good to be aware of trendlines, support, resistance, etc. in advance, so that we're prepared to take action.



The July 7 Gap Up and rally was from a close of 53.52 in the prior session. I wanted to get long FCX if that gap got filled, which it did.

In Monday's session, I purchased only 1,000 shares, at 53.58, just above the gap, in case the gap didn't get filled entirely. Given how bullish the June 28 breakout was, I wanted in, but not with a lot of shares just yet.



In yesterday's session, I bought much more aggressively, in both accounts, when I saw the Double Bottom break out above the horizontal white, and the Bull Flag (pattern in blue break out). Later on in the session, a Symmetrical Triangle formed (pattern in orange), which ended up being "nested" within an Ascending Triangle (pattern in yellow), so there were four intraday patterns.

Notice that after FCX put in the second high at the top of the Ascending Triangle/Rectangle, it pulled back and found support at the top of the Symmetrical Triangle (orange arrow). "Former resistance became support" and FCX was good to go. It exploded to the gap from that validation of support.

When FCX took out the 54.41 and 54.42 highs of the Ascending Triangle, it was a QUADRUPLE breakout on the session, with 55.37 IN PLAY from the Double Bottom breakout.

Math for the Double Bottom:

54.21 - the pivot high of the "W"-Bottom, or Double Bottom
53.05 - the more conservative of the 53.02 and 53.05 lows.

54.21 - 53.05 = 1.16 points of upside on a takeout of 54.21.

54.21 + 1.16 = Target: 55.37 IN PLAY

Remember what we just said about "intervening resistance" on the way to a target? The horizontal red lines represent gap resistance, from 54.73 to 55.02. Because of that resistance, I shaved my upside expectations and sold all of my shares in the 54.90's below the 55.02 top of that gap resistance, and was VERY glad that I did.



The session high was only 55.08, shy of the 55.37 Double Bottom target IN PLAY, then FCX sold off a dollar into the close. If I had gotten greedy and had not respected the nearby gap resistance area, I would have given back just about all of my gains. UGH.



I bought another 1,000 shares yesterday in this account, then sold all 2,000 shares (1,000 shares from Monday) at gap resistance.



Bought and sold these shares yesterday.

Gain on the session: $3,650