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, th.