Not all of the setups we're looking at today are bullish -- we're capping things off with a bearish setup forming in Northeast Utilities (NU) right now. A quick glimpse at NU's chart should be enough to give traders a pretty good look at what's going on: shares hit their head on $40.50 resistance twice in the last several months, topping out as buying pressure got completely stomped out by sellers looking to take gains at that level.
In technical parlance, that's created a "double top" setup in NU. For a double top pattern, the sell signal comes when shares break down below the trough that separates the two peaks -- in NU's case, that price level is $36.50, a price that also acted as support way back in May. Now, $36.50 is the closest place where NU can consistently catch a bid -- if shares move below that level, then much more downside looks likely.This is a longer-term setup, which means that it's got longer-term trading implications when and if it triggers. While that's unlikely to happen this week, it should pay off for traders who keep an eye on it. To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr. At the time of publication, author had no positions in stocks mentioned.
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