Freeport-McMoRan: Bearish Signs

Dec.14.09 | About: Freeport-McMoRan Inc. (FCX)

By Bryan McCormick

A potential bearish price pattern is developing on the daily chart of Freeport-McMoRan Copper & Gold (NYSE:FCX), a "flag" formation that would become active on a move below $76.

FCX Chart

I have outlined the flag with yellow lines. The downside potential for the pattern would be roughly to the $67 area, as shown by the light blue vertical line.

While not shown on the chart, a breakdown in price now would also represent a bearish crossing of the 10- and 50-day moving averages. This is a trigger condition in some technical trading systems for a confirmed "sell" signal.

The uptrend in place since July would also be broken if the stock reached its pattern potential, which could lead to further price weakness. The pattern would be voided, even as a potential, if price broke above the top yellow line of the pattern. This would correspond to a move in price, on a sustained basis, above the $80 area.

(Chart data provided by Thomson Reuters)