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Freeport-McMoRan Struggles Near Its Key Resistance Level

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Key resistance level

Traders and investors analyze technical aspects while making market entry and exit decisions. Resistance and support levels are among the most commonly used technical parameters. Before we look at Freeport-McMoRan’s (FCX) key resistance levels, we’ll see why resistance and support levels are important.

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Importance of resistance and support levels

Support levels typically act as a floor for stock prices. As a stock approaches its support levels, more buyers emerge while selling pressure generally subsides. However, if the stock fails to hold its support levels, the bears take charge and push the stock even lower. If a stock breaches its support level, the price level generally becomes a near-term resistance for the stock.

A resistance level is the opposite of a support level, representing a price level at which a stock faces selling pressure.

Freeport-McMoRan facing resistance

For the last three months, Freeport-McMoRan (FCX) has been finding key support near its 200 DMA (day moving average) while its 100 DMA has acted as a resistance level. In September, FCX bounced from its 200 DMA as the Federal Reserve’s decision to hold rates and OPEC’s announcement to cut crude oil production boosted sentiments.

Among the other miners (XME), Teck Resources (TCK), Southern Copper (SCCO), and BHP Billiton (BHP) saw upward price action in the last week of September on improved sentiments.

However, Freeport-McMoRan (FCX) is currently facing resistance at its 100 DMA. The stock has been fluctuating in a narrow price channel for the last few months. Can the stock break free from its narrow trading range? We’ll address that question by taking a closer look at the various fundamental factors later in this series. In the next article, we’ll look at the factors that drove Freeport-McMoRan’s 3Q16 price action.

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