We reviewed the charts of Freeport-McMoRan (FCX) on Feb. 10 and wrote that "Traders who are long FCX should continue to hold those positions. Our new price target is the $58 area, up from $56. Aggressive traders could add to longs on a close above $46." Let's pay another visit to the charts and indicators.
The Phoenix, Arizona-based miner produced approximately 3.2 billion recoverable pounds of copper in 2020. FCX also produces gold and molybdenum, but let's check on the charts of copper futures.
In this weekly Japanese candlestick chart of copper futures, below, we can see that prices are close to the apex of a nine-month equilateral triangle formation. Prices have been trading around the 40-week moving average line. Notice the number of lower shadows since August telling us that traders are rejecting the lows. This is a subtle, yet bullish development. Trading volume has been diminishing through the pattern and that is typical of this kind of continuation pattern. The weekly OBV line shows us a bullish rise from February implying that buyers of copper futures have been more aggressive despite the tighter and tighter trading range. The Moving Average Convergence Divergence (MACD) oscillator has made a rounded or saucer-like turn to the upside.
In this weekly close only Point and Figure chart of copper futures, below, we used a five box reversal filter. Here the chart shows a price target of $5.47. A trade at $4.78 will refresh the uptrend.
In this daily bar chart of FCX, below, we can see that prices have made a bull flag formation since our February 10th review. Flags are short-term continuation patterns and typically continue the trend in force before the pattern unfolded. FCX is trading above the rising 50-day moving average line as well as the rising 200-day line. The On-Balance-Volume (OBV) line shows a small bump up so far in February. Maybe this is the start of a shift in direction. The MACD oscillator is just above the zero-line.
In this weekly Japanese candlestick chart of FCX, below, we see a different triangle than what the futures chart showed. Here the chart has outlined, I believe, a rising or bullish triangle - higher lows but equal highs until there is an upside breakout. Prices are above the cresting 40-week moving average line. The weekly OBV line has been rising since September and the Moving Average Convergence Divergence (MACD) oscillator is bullish.
In this weekly close only Point and Figure chart of FCX, below, we can see a $61 price target. A trade at $46 should refresh the uptrend.
Bottom line strategy: Commodity prices are driven by supply and demand. Typically demand changes slowly and supply shocks like a mine closure or labor problems generate price surges to the upside. Based on my assessment of the charts (above) I would remain long shares of FCX and remain ready to add to longs on strength above $46.
