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5 Stock Charts You Need to See

Stocks in this article: AMD BRK.B FNMA WFC FB

Wells Fargo

Despite the bearish overtones in the market right now, the financial sector has shown leadership over the course of the last month and change. And in July, one of the best-in-breed financials is big bank Wells Fargo ( WFC). Here's how to trade it.

>>3 Big Stocks Rising on Big Volume

Wells has spent the last month and change tracking sideways, forming a bullish price setup called an ascending triangle. The ascending triangle is formed by a horizontal resistance level above shares (at $41.50, in this case) and uptrending support to the downside. Basically, as WFC bounces in between those two technically important price levels, it's getting squeezed closer and closer to a breakout above resistance. When that breakout happens, we've got a buy signal.

That's true regardless of what's going on in the broad market.

Wells Fargo is going to tip traders off early with momentum -- our go-to momentum gauge, 14-day RSI, has been in a shallow downtrend since the triangle started. Expect a breakout higher in RSI right before the breakout in price.

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