The exact same setup is taking shape in Pool ( POOL). The aptly named $2.5 billion swimming pool supply firm is forming an ascending triangle pattern of its own with resistance at $55 and uptrending support to the downside more or less in step with the 50-day moving average. Just like with Disney, POOL becomes a buy on a breakout above resistance at $55.
Whenever you're looking at any technical price pattern, it's critical to think in terms of buyers and sellers. Triangles and other price pattern names are a good quick way to explain what's going on in this stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.That resistance line at $55 is a price where there's an excess of supply of shares; in other words, it's a place where sellers have been more eager to take recent gains and sell their shares than buyers have been to buy. That's what makes the move above it so significant -- a breakout indicates that buyers are finally strong enough to absorb all of the excess supply above that price level. Wait for that signal to happen before you jump into this stock.
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