VMWare

Last up today is VMWare ( VMW), a stock that's been getting ready for a reversal. Even though VMWare posted decent returns in 2012, the stock has been trending lower since early April. But a double bottom pattern in shares suggests that this stock could be about to make more upside progress in 2013.

A double bottom is a price pattern that's formed by two swing lows that bottom out at approximately the same price level. The two bottoms are separated by a peak that marks that resistance level for the setup. A breakout above that price (right around $100 for VMW) is the buy signal for shares.

$102.50 is actually the top of the peak for this stock, but the lower price means more for this trade. The fact that VMW's resistance comes in at $100 is significant: big psychological price barriers like $100 can often act as stumbling blocks for buyers, so if VMW can overcome resistance there, buyers have a doubly strong signal.

Momentum adds some extra confidence to this trade -- 14-day RSI has been trending higher since the second bottom started forming. If you decide to be a buyer when the $100 breakout happens, it makes sense to keep a protective stop just under the bottom of the price pattern.

To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

If you liked this article you might like

Jim Cramer on Nordstrom's Plans to Go Private

In Retailers' Gang War, This Is Why I Am Rooting for Walmart: Market Recon

Janet Yellen and Powerball - 5 Things You Must Know Before the Market Opens

Cramer: This Rally Isn't Without Meaning