Is this breakout a good trade for you?

Will Diageo turn, or will it continue to rise beyond 2,766p October highs?

• The chart shows the last 3 weeks’ price action for Diageo.
• The shares have broken above resistance level around 2,697p to trade 2,716p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Breakout is supported by recent market sell-off that benefits “defensive” consumer staple manufacturers like Diageo.
• Shares -6.4% from 2018 highs; +15.2% from 2018 lows; flat year-to-date.
• Source: Bloomberg, FT, Reuters, DJ Newswires

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 4,111p. To do this, you need £2,000.

Let’s assume the Diageo trend continues to 2,881p July highs (+6%). Your profit would be £600, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 4% from the current price. Diageo breaks lower, falling 4% and it hits your stop-loss. Your loss would be £400.

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