Natural gas and power utility NiSource (NI - Get Report) is forming a pretty conspicuous pattern of its own right now, having been locked in a channel up for all of 2012. With shares of NI lingering around trendline support in this morning's session, now looks like a good time to be a buyer.
Basically, a trendline support level is a dynamic support level that shows traders where demand is for shares of NI. And because NI's price has been continually increasing along that trendline, it's clear that buyers are in control of this stock right now. The optimal entry point on this trade comes when NI bounces off of trendline support -- keep in mind that trendlines do eventually break, and when they do, we don't want to be left holding the bag. By waiting for shares to catch a bid at trendline support before buying, we've got a signal that the line is still valid before putting money on the line.The 50-day moving average has been a picture-perfect support level over the course of this pattern - that gives us an easy-to-define stop loss level to use on this trade. A breakdown below the 50-day tells us if we were wrong on this trade. To see this week's trades in action, check out the High Volume Technicals portfolio on Stockpickr. -- Written by Jonas Elmerraji in Baltimore.
Twitter and become a fan on Facebook. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.