We're seeing the exact same setup in shares of smaller pharma firm Actavis (ACT). That's not hugely surprising; correlation levels in the broad market are high to begin with, so firms within the same sector typically present similar trading opportunities at similar times. Like Amgen, ACT has resistance above shares (coincidentally also at $90) and uptrending support below.
A slightly steeping uptrend to ACT's support line indicates that buying pressure is a little stronger in this stock. And buying pressure is the key force worth considering in this trade.With any technical pattern, it's critical to think in terms of buyers and sellers -- not shapes. After all, triangles, wedges and the like are a good way of describing what's happening on a chart, but they're not the reason why it's tradable. Instead, that all comes down to the supply and demand caused by those buyers and sellers. The horizontal resistance level at $90 is a place where a glut of sellers has been looking to unload shares and take gains from 2012's rally. A breakout would mean that increasingly eager buyers were able to absorb all of the excess supply of shares that's been sitting overhead. That's why it's the ideal time to buy.
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