For today's chart we've chosen to take a look at Safeway Inc. (NYSE:SWY) because it is testing a long-term level of support. As you can see from the chart below, the $25.89 level acted as resistance between 2003 and 2006. The surge in buying pressure is a common occurrence when the price breaks above an established level of resistance (shown by the price action in late 2006). As you can see from the chart below, the upward momentum became exhausted near $37 and it has drifted toward the trendline for most of the past year.
This chart is of specific interest to traders because it is nearing the influential support/resistance of the $25.89 level. Many bullish traders will watch for the horizontal trendline to act as a strong level of support and they will likely watch for the price to bounce higher from here. It wouldn't be surprising to see traders protect their long positions by setting a stop-loss order below the trendline.
Tickers in this Article: SWY