Is this breakout a good trade for you?

Will Centrica turn, or will it continue to break upwards beyond 155p?

• The chart shows the last 2.5 month’s price action for Centrica.
• The shares have broken above a resistance line at 153p to trade 155p.
• The shares are trading their best since late July.
• The ‘trend is your friend’. Will it continue?
• Shares -6.7% from 2018 highs; +24.7% from 2018 lows; +12.6% year-to-date.
• Utilities are considered non-cyclical defensives, safe ports in the case of a stock market storm
• The shares have a projected dividend yield of 7.8%, among the best on the UK 100

Click to enlarge

Trading Centrica – 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 Centrica using a CFD, at the current price of 154.7p. To do this, you need £2,000.

Let’s assume the Centrica trend continues towards June highs of 164p (+5.8%). Your profit would be £580, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 2% from the current price. Centrica breaks down, falling 2% and it hits your stop-loss. Your loss would be £200.

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