Rentech Nitrogen Partners LP (NYSE: RNF)

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Rentech Nitrogen Partners, L.P. engages in the production of natural gas-based nitrogen fertilizer and industrial products for agricultural uses. The company primarily offers ammonia, urea ammonium nitrate, urea granule and urea solution, nitric acid, and liquid carbon dioxide. It markets its products in the states of Illinois, Iowa, and Wisconsin. Rentech Nitrogen GP, LLC serves as the general partner of Rentech Nitrogen Partners, L.P. The company was founded in 1965 and is based in Los Angeles, California. Rentech Nitrogen Partners, L.P. is a subsidiary of Rentech, Inc.

To review potential trading opportunities with RNF’s stock, please take a look at the 1-year chart of RNF (Rentech Nitrogen Partners, L.P.) below with my added notations:

1-year chart of RNF (Rentech Nitrogen Partners, L.P.)

After rallying higher since June, RNF may have possibly formed a double top price pattern (blue). Double tops are reversal patterns and are as simple as they sound: Rallying up to a point (T), selling off to a support, and then rallying back up again to approximately the same top (T). As with any price pattern, a confirmation of the pattern is needed. RNF would confirm this pattern by breaking the $35 support (red) that has been created by the double top pattern.

Keep in mind that the stock could simply be consolidating, and unfortunately, there’s no way to know which.

The Tale of the Tape: RNF may have formed a double top price pattern with a $35 support level. Although a long trade could be entered on a pullback to the $35, the price pattern seems to imply an impending break of support. If that happens, a short trade should be placed with a stop set above $35.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT