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January 24 Chart of the Day - Freeport-McMoRan

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Freeport-McMoRan, Inc. (FCX), a leading international mining company released earnings before the market open today and was trading up nearly 10% to $41 and change earlier today before fading back under $40.

From a price action technical analysis perspective, on the monthly chart we can see a change control zone roughly between $36 and $39 (gray shaded rectangle area) that first started to form back in 2006.  

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

Price has crossed this zone over 36 times during that time span and even more so down on the weekly chart.

So it shouldn't be a surprise where price gravitated towards regardless of today's earnings new.

On the weekly chart we can see a wedge pattern forming where the price cycles seemingly are getting closer and tighter.  When this happens price can often aggressively break away from the pattern but the direction and the timing can never be known in advance.

In the meantime, buy and hold investors may be impatient with this chart however, traders who desire movement in either direction should be much happier.

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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