Is this breakout a good trade for you?

Will Sainsbury turn, or will it continue to rise beyond 310p?

• The chart shows this month’s price action for Sainsbury.
• The shares have broken above a horizontal resistance level around 307p to trade 310p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares rise back to 325p October highs?
• Shares -10.7% from 2018 highs; +35.8% from 2018 lows; +28.2% year-to-date.
• 16 Oct: UK Competition Authority to probe effect of Sainsbury-Asda merger on suppliers
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Sainsbury – An Example

Let’s say the Sainsbury breakout appeals to you, you think it’s likely to continue. You decide to buy exposure to £10,000 worth of Sainsbury using a CFD, at the current price of 310p. To do this, you need £2,000.

Let’s assume the Sainsbury trend continues upwards to 325p (-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 3% from the current price. Sainsbury breaks lower, 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.