Is this breakout a good trade for you?

Will British American Tobacco turn, or will it continue to rise beyond 3640p?

• The chart shows the last 2 months’ price action for British American Tobacco.
• The shares have broken above a horizontal resistance level around 3467p to trade 3638p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares rise back to 4240p August highs?
• Shares -29.4% from 2018 highs; +13.8% from 2018 lows; -27.6% year-to-date.
• Defensive shares like Tobacco benefiting from stock market correction
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading British American Tobacco – An Example

Let’s say the British American Tobacco breakout appeals to you, you think it’s likely to continue. You decide to buy exposure to £10,000 worth of British American Tobacco using a CFD, at the current price of 3638p. To do this, you need £2,000.

Let’s assume the British American Tobacco trend continues upwards to 4240p (+16.5%). Your profit would be £1650, 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. British American Tobacco 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.