Praxair (PX - Get Report) is showing us a similar setup right now, just with a different lead-up. Shares of the $31 billion industrial gas supplier have been in a downtrend since late April, when the stock topped out and dropped hard. But the ascending triangle setup that's been shaping up looks like a bottom for PX and a buying opportunity for traders.
Like the setup with ENB, Praxair's ascending triangle has a horizontal resistance level and uptrending support. Resistance comes in at $109 -- that's the price we'll want to see a breakout above before a buy signal comes through for PX. It's important to look at any technical pattern in real world terms; while calling this pattern a triangle is a good way of describing how it looks on a chart, the shape doesn't have a whole lot more significance than that.Instead, it's valuable to think of this setup in terms of buyers and sellers. Basically, resistance is a price level where there's a glut of selling pressure. Historically, that $109 resistance line has been a price above which sellers are more eager to sell and get out of this stock than buyers were to buy. Even so, the uptrending support level does tell us that buyers are in control of PX at some level. When buyers build up enough steam to absorb all of those asks floating up around $109, the breakout happens and it makes sense to be a buyer. Until then, it doesn't.