Boardwalk Pipeline Partners, LP (NYSE: BWP)

Boardwalk Pipeline Partners, LP, through its subsidiaries, provides transportation, storage, gathering, and processing services for natural gas and natural gas liquids (NGLs). The company operates interstate natural gas and NGLs pipeline systems, including integrated storage facilities. Its pipeline systems contain approximately 14,195 miles of interconnected natural gas pipelines, directly serving customers in 13 states and indirectly serving customers throughout the northeastern and southeastern U.S. through various interconnections with unaffiliated pipelines. The company also owns approximately 255 miles of NGLs pipelines serving customers in Louisiana. In addition, it has underground storage caverns having aggregate capacity of approximately 207.0 billion cubic feet of working natural gas and 17.6 million barrels of NGLs.

Take a look at the 1-year chart of Boardwalk (NYSE: BWP) below with added notations:

1-year chart of Boardwalk (NYSE: BWP)

After a steady 5-month rally BWP dropped into October and has been trading sideways ever since. During the sideways move the stock has formed a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.

BWP’s rectangle pattern has formed an $18 resistance (red) and a $15 support (blue). At some point the stock will have to break one of the two levels.

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The Tale of the Tape: BWP is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $15 or on a breakout above $18. The ideal short opportunities would be on either a break below $15 or on a rally back up to $18.

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

Follow me on Twitter: @cmtstockcoach