Advance Auto Parts
Advance Auto Parts (AAP) has seen some interesting price action of its own lately. But the most interesting part of AAP's chart may be the price action that hasn't happened yet.
That's because Advance is currently forming an ascending triangle pattern, a bullish setup that's formed by a horizontal resistance level above shares (in this case at $81) and uptrending support below shares. Essentially, as AAP bounces in between those two technically important price levels, it's getting squeezed closer and closer to a breakout above that $81 price ceiling. When the breakout happens, we've got a buy signal for this stock.
Momentum adds some extra evidence for upside in AAP. While it's shallow, 14-day RSI has been in an uptrend since shares spiked following third-quarter 2012 guidance at the end of October. Since momentum is a leading indicator of price, that's a good sign for traders right now.Extra evidence aside, it's critical to wait for the price breakout before becoming a buyer. Don't be early on this trade.
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