Is this breakdown a good trade for you?

Will Babcock turn, or will it continue to fall beyond 660p?

• The chart shows the last 7 month’s price action for Babcock
• The shares have broken below a support level at 697p to trade 671p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares fall back to March 628p lows?
• Shares -21.4% from 2018 highs; +12.9% from 2018 lows; -5.0% year-to-date.
• 19 Sept: Babcock’s Avincis Oil & Gas unit  ‘may attract buyers’, says Jefferies
• 19 Sept: Babcock reiterates full year profits guidance
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Babcock – An Example

Let’s say the breakdown appeals to you, you think it’s likely to continue. You decide to sell exposure to £10,000 worth of Babcock using a CFD, at the current price of 670p. To do this, you need £2,000.

Let’s assume the Babcock trend continues downwards to 628p (-6.3%). Your profit would be £630, 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. Babcock breaks higher, rising 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.