While gold and silver have been on a tear in August and September, one leading copper miner has struggled to find support. But improved price action this week suggests Freeport-McMoRan, Inc. (FCX) may be poised for further upside into the fourth quarter. Before we get this week’s breakout, we first need to understand how the table was set with a classic topping pattern over the summer. FCX experienced an almost perfectly constructed head-and-shoulders top earlier this year, with a major high in May around $55, then two lower highs in April and July. The key to a head-and-shoulders topping pattern is to watch for a breakdown of the “neckline” formed by the swing lows between those three price peaks. When Freeport finally broke below the neckline around $47 in mid-July, the height of the pattern implied a minimum downside objective of around $40. Sure enough, this level was reached in early August, and FCX ended up bouncing off this support two times before this month’s upswing. Looking at the momentum characteristics, we can see that FCX has often shown higher RSI levels at major lows. When the stock tested support in August and September 2024, as well as back in October and November 2023, these tests were marked by upward sloping momentum readings. We can see the opposite at the May 2024 peak, as the price moved higher on weaker momentum readings, indicating a lack of upside pressure as the stock was achieving a new high. So with a bearish momentum reading at the May peak, then a bullish momentum reading at the August and September lows, FCX was primed for an upside breakout. Zooming out a bit, we can the larger structure of the last two years, showing how the stock was in a basing pattern for most of 2023 and into 2024. The breakout in March 2024, leading to the May peak, suggested a new uptrend as the price exited this basing pattern. The recent pullback into the August and September lows represented a retest of this basing pattern, and this week’s rally indicates a high likelihood of a retest of the July top. The stock gapped higher on Tuesday, pushing above short-term resistance around $46 as well as a trendline using the May and July highs. As long as FCX remains above $46, that would mean it’s holding the previous resistance level and also would mean it’s staying above the 200-day moving average. The stock did become overbought this week, with the RSI popping just above the 70 level on the recent breakout. This configuration suggests investors could watch for a pullback to a higher low, potentially providing a more ideal entry point to play this improving copper miner. -David Keller, CMT marketmisbehavior.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
