Is this breakout a good trade for you?

Will Diageo turn, or will it continue to break upwards beyond 2700p?

• The chart shows the last 11 days price action for Diageo.
• On Friday the shares broke above a resistance line at 2666p.
• The ‘trend is your friend’. Will it continue?
• Jefferies (20- Sept) “Diageo shares already price in emerging-market FX turbulence”
• Shore Capital (20 Sept): “A combination of discipline and agility is enabling Diageo to deliver on its goals following a good start to the year”

Click to enlarge

Trading Diageo – 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 Diageo using a CFD, at the current price of 2696p. To do this, you need £2,000.

Let’s assume Diageo’s trend continues to July highs of 2884p (+7.0%). Your profit would be £700, 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. Diageo’s trend 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.