A descending triangle has formed in the chart of Allegion (ALLE) and a trade is likely setting up soon.

Allegion (ALLE - Get Rating) is a global security products company with a portfolio of leading brands, including Schlage, Von Duprin, and LCN. The company will benefit from strength in the electronic products business and a large customer base. ALLE’s cost-cutting measures, dividend payments, and share repurchases are beneficial to shareholders.

Take a look at the 1-year chart ALLE below with added notations:

Chart of ALLE provided by TradingView 

Over the two months, ALLE has hit the $95 support (green) on two separate occasions, while also starting a trend line of resistance (red). Together, these two lines have formed a descending triangle on ALLE. Eventually, the stock will have to break either the trendline resistance or the $95 support.

A trader could buy ALLE on a break above the trendline with expectation of a breakout, or short the stock if it were to fall below the $95 support with the expectation of a breakdown.

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Christian Tharp, CMT

@cmtstockcoach

ALLE shares were trading at $104.33 per share on Wednesday morning, up $0.17 (+0.16%). Year-to-date, ALLE has declined -15.72%, versus a 5.86% rise in the benchmark S&P 500 index during the same period.

About the Author: christian

Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...

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