5 Big Stocks Set to Slingshot Higher

Roper Industries

A very similar setup is shaping up in shares of Roper Industries (ROP) right now. For this stock, the resistance level to watch is $103, and support comes in at $95. Like SWKS, the key to trading this setup is to wait for a break outside of the channel, and then take a position in the direction of that breakout.

If you cut your teeth as a value investor, it may seem unintuitive to buy when the stock's price is higher and sell when the valuation gets cheaper. But there's a very good reason for trading ROP like that; to understand it, you've got to think about what's going on with buyers and sellers.

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Essentially, that $103 resistance level exists because there's a glut of supply of shares at and above $103 -- it's a place where sellers are more eager to sell and take gains than buyers are to buy, and price stalls out there as a result. A breakout above $103 signals that buyers have completely absorbed the asks above $103 (they'd have to for ROP to print a price above that level). Without that technical barrier to prices moving higher, suddenly buying ROP above $103 becomes a high probability trade.

As a technical trader, you shouldn't care if a stock becomes more expensive as long as it keeps getting more expensive after you buy shares.

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