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Freeport-McMoRan could rally another 15 percent before hitting a wall, technical analyst says

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Trading Nation: Copper prices rise due to shortages

Freeport-McMoRan has struck gold.

The miner's shares surged on Tuesday in its fifth one-day rally of more than 5 percent since the beginning of the year.

Ari Wald, head of technical analysis at Oppenheimer, says he doesn't see a strong fundamental picture but the technicals support another rally from here.

"It doesn't fit any of our top-down themes and it doesn't necessarily scream well from a bottom-up basis either, but we can tell you we wouldn't bet against it. It is a trading stock. It looks like it's going to work higher," Wald said on CNBC's "Trading Nation " on Tuesday.

Wald says a former level of resistance at around $12.50 should offer its stock a base. It would need to drop 5 percent from Tuesday's close to reach that level. As long as it can stay above that line, Wald sees further gains.

"I think upside to $15 resistance, that's really the next upside test," said Wald.

The stock still has another 15 percent upside until it reaches $15. It has not traded above that level since August.

Gina Sanchez, CEO of Chantico Global, sees a more constructive set-up for Freeport-McMoRan.

"The fundamental story actually supports [more upside]," Sanchez said on "Trading Nation" on Tuesday. "Internally, they have cleaned up their ownership issues with Indonesian mines, they've set themselves up for sale, so they're ripe for a takeover."

Freeport and Rio Tinto sold their majority stake in the copper mine Grasberg to the Indonesia's state-owned mining company Inalum last year. The site is the second-largest copper mine in the world.  

"Externally we're seeing copper prices rising because of supply shortages and we also see support for gold. Both of those things actually benefit Freeport-McMoRan so externally and internally it's a good story," added Sanchez.

Metal prices rallied sharply on Tuesday with gold ending the day more than 1 percent higher, while copper spiked close to 3 percent.