Last up is United Rentals (URI), a stock that's showing traders the exact same ascending triangle setup as the one in PNR. URI's horizontal resistance level at $56 is the price barrier that needs to get broken before we have the signal to enter a trade in this stock.
With any technical pattern, it's critical to think in terms of buyers and sellers -- not shapes. After all, triangles, head and shoulders patterns 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 $56 is a place where a glut of sellers has been willing to step in and put a ceiling in the stock. A breakout means that increasingly eager buyers have absorbed all of the excess supply for shares sitting at that level -- and without that barrier in place, shares have room to rally to the upside. That's why it makes sense to wait for the breakout before buying this stock.To see this week's trades in action, check out this week's Must-See Charts portfolio on Stockpickr.-- Written by Jonas Elmerraji in Baltimore.
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