MasterCard

It shouldn't come as a huge surprise that we're seeing almost the exact same setup in MasterCard ( MA) right now. Like Visa, MasterCard operates in the payments industry, so correlations between the two stocks tend to be very high. The key difference in MA is that shares haven't yet broken out. That gives traders in MA a chance to be earlier on the move if Visa's top rival follows its lead.

Resistance at $532 is the price level to watch in MA. If shares break out above that $532 level, we've got a buy signal for shares.

Whenever you're looking at any technical price pattern, it's critical to think in terms of buyers and sellers. Triangles, rectangles, and other 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 $532 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 breakout above it so significant -- a breakout indicates that buyers are finally strong enough to absorb all of the excess supply above that price level. That's when you want to own shares.

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