Is this breakout a good trade for you?

Will BAE Systems turn, or will it continue to fall beyond 334p?

• The chart shows the last 9 months’ price action for BAE Systems.
• The shares have broken below horizontal support level around 557p to trade 554p (at time of writing).
• Recent political tensions surrounding Saudi Arabia (a major customer for BAE Systems defense systems) has weighed down on the shares.
• The ‘trend is your friend’. Will it continue?
• Will the shares fall back to 334p November 2017 lows?
• Shares -17.7% from 2018 highs; now trading at 2018 lows; -3.6% year-to-date.
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading BAE Systems – An Example

Let’s say the breakdown appeals to you, you think it’s likely to continue. You decide to buy exposure to £10,000 worth of BAE Systems using a CFD, at the current price of 554p. To do this, you need £2,000.

Let’s assume the BAE Systems trend continues downwards to 334p (-39.7%). Your profit would be £3,970, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 10% from the current price. BAE Systems breaks higher, rising 10% and it hits your stop-loss. Your loss would be £1,000.

This is provided for information purposes only. It should not be taken as a recommendation.