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Travelers

Now let's move from Citigroup to a stock that's a former unit of Citigroup: Travelers (TRV). Travelers probably isn't most people's idea of a trading vehicle -- it's a $24.6 billion insurance firm, after all. But this stock is forming a bullish setup in shares right now, indicating that the supply-demand relationship in TRV is offering up a favorable trade.

Here's what to watch for:

Travelers is forming a nearly textbook ascending triangle pattern, a setup that's formed by horizontal resistance and uptrending support. Essentially, as shares bounce in between those two significant price levels, they're getting squeezed closer and closer to a breakout above resistance (at $64.75, in TRV's case). That breakout is the buy signal for shares.

>>5 Volatile Stocks to Buy More Of

Volume adds some confirmation to this setup -- trading volume has been declining over the course of the pattern, yet another factor that makes the triangle in TRV a "textbook" trade. Ideally, we'll want to see volume snap higher on the breakout, a move that indicates that buyers are participating in an important move.

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