Take a look at the 1-year chart of Sanderson (NYSE: KN) below with my added notations:
KN has formed a key support level at $18.00 (green) over the past 9 months. Although the stock has dipped below that level a few times, it always rallies back up to hold that mark. In addition, the stock is declining against a short-term, down trending resistance level (red). These two levels combined had KN stuck within a common chart pattern known as a descending triangle. Eventually, the stock will have to break one of those two levels.
The Tale of the Tape: KN is sitting at its triangle support. A short trade could be made on a break of support or on a rally up to resistance. A long trade could be made at support or on a break through the triangle resistance.
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