Is this breakout a good trade for you?

Will Pennon turn, or will it continue to rise beyond recent 740p highs?

• The chart shows the last 2 month’s price action for Pennon.
• The shares have broken out to fresh October highs, and have rising support.
• Currently trading at 739.5p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Shares -9.9% from 2018 highs; +27.1% from 2018 lows; -5.7% year-to-date.
• Pennon is a UK Water and Environmental Utility infrastructure company
• 24 Sept: Pennon says it’s on track to meet full year expectations
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Pennon – An Example

Let’s say the breakout appeals to you, you think it’s likely to continue. You decide to buy exposure to £10,000 worth of Pennon using a CFD, at the current price of 739.5p. To do this, you need £2,000.

Let’s assume the Pennon trend continues to 786.7p August highs (+6.4%). Your profit would be £640, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 3% from the current price. Pennon breaks lower, falling 3% and it hits your stop-loss. Your loss would be £300.

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