In my post Have A Plan For This Correction I revealed a chart of FCX which could [or could not] be a rising wedge breaking to the downside. In such a trade I like to compare the chart with
- The overall market direction; is it climbing higher or selling off?
- What about the USD? Stronger dollar would put pressure on commodities
- Seasonal demand for the commodity; in this case gold and copper
- Check the *fear* gauge. VIX
These factors can obviously equal your trade spitting into the wind as it it’s June and demand is low but the market is selling off and the VIX is on the rise, gold could skyrocket merely from the fear factor alone so pattern may not be enough. Check the chart, check those factors and while I’m not advocating shorting FCX, you could select a weakling in the same sector and have similar if not better results. Good luck