Will Sainsbury break lower, or will it rise back again to August’s 341p highs?

• The Sainsbury trading range has developed since early May.
• Shares bounced 3 times off support zone around 297p, most recently 2 weeks ago.
• Now trading at 309p (at time of writing).
• Will the pattern repeat itself, testing previous highs?
• Shares -9.2% from 2018 highs; +38.1% from 2018 lows; +28.3% year-to-date
• Sainsbury has been in merger negotiations with Walmart’s ASDA to create UK’s largest supermarket chain.
• The merger has been under review by UK’s competition authority and a positive result of the review could help the shares rally.
• Source: Bloomberg, FT, Reuters, DJ Newswires

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Trading Sainsbury – An Example

Let’s say you like the Sainsbury  range, you think it’s heading back towards 341p October highs again. You decide to buy exposure to £10,000 worth of Sainsbury using a CFD, at the current price of 309p. To do this, you need £2,000.

Let’s assume Sainsbury rises back to 341p (+10.3%). Your profit would be £1030, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price. Centrica falls 5% and hits your stop-loss. Your loss would be £500.

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