Is this breakout a good trade for you?

Will Premier Oil turn, or will it continue to break upwards beyond 137p?

• The chart shows the last 6 months of price action for Premier Oil.
• The shares have broken above resistance lines at 130.2p and 134.75p.
• The ‘trend is your friend’. Will it continue?
• Shares -4.4% from 2018 highs; +98.8% from 2018 lows; +77.4% year-to-date
• Shares benefiting from Oil prices at 4-year highs ($81/barrel)
• Analysts at Davy (23 Aug) say the case for investing in Premier Oil should improve following the North Sea oil producer’s first-half results with production guidance “quite achievable”. Furthermore, “Lower financial risk and a clear path to growth should make the investment case more compelling.”

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Trading Premier Oil– 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 Premier Oil using a CFD, at the current price of 135.8p. To do this, you need £2,000.

Let’s assume Premier Oil’s trend continues to May 2015 highs of 193p (+42%). Your profit would be £4,212, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price. Premier Oil‘s trend breaks down, falling 5% and it hits your stop-loss. Your loss would be £500.

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