Will Direct Line turn, or will it continue to rise beyond 345p?

• The chart shows the price action for Direct Line since mid-June.
• The shares have broken above falling highs resistance trendline at 326p to trade 329p (at time of writing).
• Shares +5% in one week. The ‘trend is your friend’. Will it continue?
• Shares -13.5% from 2018 highs; +7% from 2018 lows; -13.5% year-to-date.
• 6 Nov: Insurance company reported its gross written premium fell in the third quarter, but it remains on track to meet 2018 targets.
• Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal

Click to enlarge

Trading Direct Line – An Example

Let’s say the breakout appeals to you, you think it’s likely to continue to . You decide to buy exposure to £10,000 worth of Direct Line using a CFD, at the current price 329p (at time of writing). To do this, you need £2,000.

Let’s assume the Direct Line trend continues upwards to 345p July highs (+4.8%). Your profit would be £480, 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. Direct Line breaks lower, 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.