Is this breakout a good trade for you?

Will BP turn, or will it continue towards 8.5yr highs of 650p?

• The chart shows the last 4 month’s price action for BP.
• The shares have broken above a resistance line at 597p to trade 600p (at time of writing).
• The share trade their highest since May 2010
• The ‘trend is your friend’. Will it continue?
• Shares trade fresh 2018 highs; +32% from 2018 lows; +14.7% year-to-date.
• Oil majors benefiting from high oil prices, with Brent crude at 4yr highs on supply concerns
• Goldman Sachs says (14 Sep) BP likely to hit “cash flow sweet spot” next year thanks to strong earnings and largest-ever project pipeline.
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading BP – 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 BP using a CFD, at the current price of 600p. To do this, you need £2,000.

Let’s assume the BP trend continues upwards to 650p (+8.3%). Your profit would be £833, 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. BP breaks down, 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.