Is this breakout a good trade for you?

Will Severn Trent turn, or will it continue to rise beyond 1900p?

• The chart shows the last 6 weeks’ price action for Severn Trent
• The shares have broken out from a falling channel to trade 1882p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares rise back to August 2026p highs?
• Shares -13.8% from 2018 highs; +12.9% from 2018 lows; -12.9% year-to-date.
• 3 Sept: Severn Trent 2020-2025 business plan aims at 13% efficiency in spending
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Severn Trent – 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 Severn Trent using a CFD, at the current price of 1882p. To do this, you need £2,000.

Let’s assume the Severn Trent trend continues upwards to 2026p (+7.7%). Your profit would be £770, 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. Severn Trent 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.