Is this breakout a good trade for you?

Will Micro Focus turn, or will it close the March gap at 1880p?

• The chart shows the last 7 month’s price action for Micro Focus.
• The shares have broken above a resistance line at 1407p to trade 1447p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares close the March gap at 1880p?
• Shares -45% from 2018 highs; +83% from 2018 lows; -43% year-to-date.
• 18 Sept: Numis says software provider Micro Focus will return $3.1bn to investors
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Micro Focus – 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 Micro Focus using a CFD, at the current price of 1447p. To do this, you need £2,000.

Let’s assume the Micro Focus trend continues upwards to 1880p (+30%). Your profit would be £3000, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 7% from the current price. Micro Focus breaks down, falling 7% and it hits your stop-loss. Your loss would be £700.

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