For today's chart we've chosen to take a look at
Electro Scientific Industries (NASDAQ:
ESIO) because it is trading between the support and resistance of a symmetrical triangle. As you can see from the chart below, this chart pattern has been forming since mid 2003 and the price now looks like it is setting up for a move beyond one of the trendlines. Traders will watch for a break above the resistance (currently near $24) to signal an end of the sideways momentum and the start of a short-term move back toward the high of the pattern near $30. Longer-term traders will watch for a move even higher.
Conversely, a close below the support (currently near $17) will be used to signal a sharp move lower and will suggest that stock is about to move toward the low of the pattern near $14. It will take more time to see which of these scenarios will actually pan out, but when the price does eventually break beyond one of the trendlines we'd expect it to be followed by a strong trend.
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