That's because RBS is forming a textbook ascending triangle pattern. The ascending triangle is a setup that's formed by a horizontal resistance level to the upside (in this case at $9.25) and uptrending support below shares. As RBS bounces in between those two significant price levels, shares are getting squeezed closer and closer to a breakout above that $9.25 ceiling. When the breakout happens, traders have their buy signal.
At first glance, you may notice that there are a lot of gaps in the price chart for RBS -- these gaps, called suspension gaps, are just the result of off-hours trading on the London Stock Exchange. They can be ignored for trading purposes.
We're seeing the same setup right now in shares of $7.3 billion analytical instrument maker Waters Corporation (WAT - Get Report). Waters has been trending lower for much of the last two quarters, but it looks like shares bottomed at the start of the summer -- the ascending triangle would officially break WAT out of that range.For WAT, the resistance level in play comes at $86 -- when this stock prints above that level, traders have a buy signal. Whenever you look at a price chart, it's important to think in terms of buyers and sellers, not just shapes; after all, patterns like the ascending triangle don't work because of magic or geometry. Instead, it all comes down to supply and demand in the market. That resistance level at $86 is a price where there's historically been a glut of supply of WAT shares that has overwhelmed buying pressure. In other words, it a price where sellers were more eager to sell and take gains than buyers were to keep buying. A breakout above $86 means that increasingly eager buyers have absorbed the excess supply, so it makes sense to jump in and buy. When you do, keep a tight stop. Kimberly Clark Corp. Kimberly Clark Corporation (KMB - Get Report) is showing traders an interesting setup of its own right now. Shares of KMB spent the first half of this year rallying, but when the broad market corrected lower, KMB didn't -- instead, it corrected sideways for the second half of the year. That's a big signal that Kimberly Clark is showing off some outsized relative strength right now.