FCX: Yesterday's Triple Breakout

We knew going into trading yesterday that, based on the 144/233 RSIs being at Bullish Synchronicity, a Buy Signal from that particular indicator would be generated if FCX could print above the prior session high of 55.98 and CLOSE higher on the session.

We got that Buy Signal at the open, but the open also was a possible "Gap And Crap," which means that the stock opens high, then fizzles to fill some or all of the gap, or even go lower and stage a reversal to the downside.

After FCX filled the gap yesterday morning, it had a nice little rally, to White #1. Because the chart has been bullish and because we also got the Buy Signal at 55.99 from the 144/233RSI, I was looking for an opportunity to get long the stock and that rally looked like a low was in, after the gap fill. I got long at 55.68 during the formation of the Symmetrical Triangle (pattern in white).

That Symmetrical Triangle "morphed" (changed) into an Ascending Triangle (pattern in orange) that had nearly identical highs: 55.79 and 55.80. That gave us two potentially bullish patterns, a "nested" Ascending Triangle, meaning that the Symmetrical Triangle now was "nested" within the Symmetrical Triangle. The breakout put 56.00 IN PLAY.

Notice how, during the pattern formations, the 13, 21 and 34 EMAs got "in gear,"(in their proper sequence) with the fastest 13 above the 21 and the faster 21 above the 34.

Math for the Ascending Triangle target:

55.79 - the more conservative of the 55.79 and 55.80 highs
55.58 - the low

55.79 - 55.58 = 0.21 points of upside on a breakout

55.79 + 0.21 = Target: 56.00 IN PLAY

Targets don't always get MADE, as we know. This one initially fell a little short, at 55.98. It's a trader's decision, what they want to do about that. The chart looked bullish to me, so my decision was to hold, and raise my mental stop loss, to lock in a winning trade, albeit a small one on a stop out.

After the rally to 55.98, another Ascending Triangle emerged (the pattern in yellow). If that could break out, it would put 56.18 IN PLAY, just above the early session high of 56.14.

Notice how, during the formation of this pattern, FCX was "hugging" the EMAs. At the lows (Yellow #2 and Yellow #4) FCX found support at the 34 EMA. Lovely chart structure, at this point in the session, with the three patterns and the EMAs "in gear" on the upside, supportive of a rally.

Math for the second Ascending Triangle

55.98 - Identical highs of the pattern
54.78 - Low of the pattern

55.98 - 54.78 = 0.20 points of upside on a breakout

55.98 + 0.20 = Target: 56.18 IN PLAY



After FCX broke out of the second Ascending Triangle, which now was a Triple Breakout on the session, I had a decision to make. While the chart looked bullish and while "nested" patterns and multiple pattern breakouts can be VERY bullish, given that the 56.18 target was so near the session high of 56.14, I faced the possibility of a Double Top, somewhere near 56.14. I sold my position on approach to 56.14, to defend against that Double Top possibility, and especially because the target of 56.18 was only a few pennies higher, and it was the last of the three pattern targets.

"Take profits, or at least 'some' profits, when targets get MADE."

"Don't step over dollars to pick up a few pennies."

As we can see from what ensued after I sold, the intraday Triple Breakout was, indeed, VERY bullish. The target of 56.18 got MADE and was exceeded by a good bit on the rally to 56.78.



In "The Battle For The Top Of The 2011 Falling Wedge," it once again is Advantage: The Bulls, for closing the session out above the pattern.

One of the things that I especially like about technical analysis is that it helps to remove our emotional bias if we're committed to trying to see "what is," not "what we want to see."

"What is," as far as yesterday's candle in the daily chart is concerned, is a "possibly" Bearish Long-Leggetty Doji Star, the high of which got rejected at the top of a "possible" Bearish Rising Wedge, seen in the next chart.





We never want to go seeing an Indian behind every tree, scaring ourselves half to death about some dire possibility of getting ourselves scalped by something that gets trotted out in the news, but we do want to know where we might be in trouble.

Look back at that Bearish Wolfe Wave, where we got "The Tell" on April 11, at 56.64 and again at 56.33, that all was not well with FCX. In the current time-frame, we've got a strong directional Lead-In off the late June Triple Breakout, just as we had in the early spring, and we've got a similar Bearish Rising Wedge possibility.

Bearish Wolfe Waves usually have a Wave 5 "Fakeout/Breakout." Back in April, FCX had TWO "Fakeout Breakouts." Yesterday's rally fell shy of the putative top trendline by about five cents, so it wasn't a "Fakeout Breakout," but it came close.

A break of trendline #2-#4 would warrant some caution, as would a break of the 54.77 release of earnings low.



Gain: $1,100