FCX: Falling Wedge

This daily chart of FCX is as of Friday's close. Thursday's candle was a "possibly" Bearish Doji Star, and it was followed on Friday by a Bearish Engulfing pattern. The close was 34.01. Any Bears who shorted wouldn't want to see Friday's high of 35.72 get taken out to the upside because that would negate any short-term implications from Thursday's and Friday's candles.



Yesterday morning at the opening gong, The Bulls came out of the gate on a Gap Up, to 35.17, and at 9:40AM, FCX printed a high of 35.735, a penny and a half above Friday's high of 35.72 (horizontal white line).

That kind of nominal takeout of Friday's high isn't real convincing, but by 10:21AM, FCX had printed 36.14, which was much more convincing, clearly indicating that Thursday's and Friday's bearish-looking candlesticks wasn't any kind of top.



FCX is notorious for "Gap And Crap" openings, in which the opening gets sold, the gap is filled, and sometimes more than that. On the selloff from the new Crash Recovery high of 36.14 (White #1), The Bears were looking for the "Gap and Crap" to play out, but the upside takeout of Friday's 35.72 high suggested that it might not.

The early selloff came down in a Falling Wedge, the top of which was twice validated resistannce (the two white arrows), an upside breakout of which should have "some" significance if The Bulls could pull it off. I liked The Bulls' chances, primarily based on the upside takeout of Friday's 35.72 high, and bought 5,000 FCX at 35.35.



The Bulls broke out of the Falling Wedge and took FCX back up to the highs at White Data Point #3. I considered taking profits on half the position there, but decided instead to hold and raise my mental stop to below the lows at 35.52 and 35.525 (red arrows), locking in a winner, and giving the trade a chance to be more profitable if The Bulls could take FCX back toward the 36.14 morning high.



The selloff and failure at the EMAs (red arrow) suggested that my mental stop was going to get hit, so I threw it in at 35.53-35.55.



My stop did get hit and The Bears managed to take FCX down to 35.31 around 3:25PM, but in the final half hour of trading, with (1) the opening gap NOT filled, as they had expected, and (2) the early session Crash Recovery high of 36.14 clearly indicating that a top was NOT put in on Friday, The Bears got a little nervous and many of them covered their shorts going into the close of 36.04.



Gain: $900