For today's chart we've chosen to take a look at
El Paso Corp. (NYSE:
EP) because we've identified a long-term ascending
trendline that has propped up the price since early 2003. Connecting a series of rising bottoms, as shown in the chart below, is a common method used by traders for gauging strategic points of entry. This chart is also a text-book example of how a trendline acts as a level of
support during a prolonged uptrend.
Traders will keep a bullish outlook on this stock until the price closes below the trendline (currently near $15.75). Many short-term traders will also choose to set their stop-loss orders directly below the trendline, which is why we'd expect a sharp pick up in selling pressure if there bears were able to send the price below the dotted support.
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