Will Provident turn, or will it continue to rise beyond 605p?

• The chart shows this year’s share price action for Provident Financial
• The shares have broken above a resistance line at 580p to trade 605p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares rise back to August highs of 706p?
• Shares -27.6% from 2018 highs; +40.8% from 2018 lows; -7.9% year-to-date.
• 9 Nov: Provident gets full FCA authorization for home-credit bBusiness
• 6 Nov: New CFO Simon Thomas appointed from Just Group
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Provident – 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 Provident using a CFD, at the current price of 605p. To do this, you need £2,000.

Let’s assume the Provident trend continues upwards to 706p (+16.7%). Your profit would be £1670, 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. Provident breaks lower, falling 5% and it hits your stop-loss. Your loss would be £500.

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