Shareholders of $75 billion alcoholic beverage stock Diageo ( DEO) may want to get a toast to this stock's price setup ready to go. While DEO has been consolidating sideways for the better part of 2013, zoom out a little further and the stock's trading setup looks a whole lot more auspicious. It points to considerable extra upside for shares.

That's because Diageo is currently forming an ascending triangle pattern, a price setup that's formed by horizontal resistance above shares and an uptrending support level below them. Basically, as DEO bounces higher within its trend channel, it's getting squeezed closer and closer to a breakout above resistance. That breakout above the $120 level is our buy signal for this stock.

It's critical to wait for the breakout to be confirmed before piling in -- DEO pushed through $120 earlier this month only to settle back down within the channel. I'd recommend waiting for a close above $120 followed by a consecutive white bar candle open above it before putting cash on this trade. Then, keep a protective stop at the 50-day moving average.

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