Is this breakout a good trade for you?

Will Merlin turn, or will it continue to break upwards beyond 400p?

• The chart shows the last month’s price action for Merlin.
• The shares have broken above a resistance line at 393p.
• The ‘trend is your friend’. Will it continue?
• Shares made bullish reversal from 4-month lows
• Shares -4.5% from 2018 highs; +25.3% from 2018 lows; +10.2% year-to-date
• 3 Sept: Citi has compared Merlin Entertainments‘ pricing against that of local competitors in each of the UK’s geographical regions and found that it is “generally well-positioned.”

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Trading Merlin – 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 Merlin using a CFD, at the current price of 400p. To do this, you need £2,000.

Let’s assume the Merlin trend continues to July highs of 416p (+4%). Your profit would be £416, 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. Merlin 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.