Will Centrica break lower, or will it rise back again to 156p?

• The Centrica trading range has developed since April.
• Shares bounced off support zone 4 times, most recently Friday.
• Now trading 145p (at time of writing).
• Will the pattern repeat itself, testing previous highs?
• Shares -11.7% from 2018 highs; +18.0% from 2018 lows; +5.8% year-to-date
• 6 Nov: UK Regulator Ofgem says UK Energy Price cap to start from Jan. 1
• 31 Oct: The utility company appointed Charles Berry as new Chairman
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Centrica – An Example

Let’s say you like the Centrica range, you think it’s heading back towards 156p again. You decide to buy exposure to £10,000 worth of Centrica using a CFD, at the current price of 145p. To do this, you need £2,000.

Let’s assume Centrica rises back to 156p channel ceiling (+7.6%). Your profit would be £760, 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. Centrica falls 3% and hits your stop-loss. Your loss would be £300.

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