Will Direct Line break higher, or will it fall to 301p lows again?

• The Direct Line falling range has developed since February.
• Shares fallen back from resistance ceiling 7 times; Now trading 323p (at time of writing).
• Will the pattern repeat itself, testing previous 301p lows?
• Shares -18.1% from 2018 highs; +8.1% from 2018 lows; +1.3% year-to-date
• 16 Jan:  Canaccord Genuity initiated coverage with a Sell recommendation and 280p target.
• 15 Nov: UK Insurers say Brexit deal doesn’t address need for regulatory cooperation
• 6 Nov: Citi says Direct Line faces bumpy road in motor insurance
• Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal

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Trading Direct Line – An Example

Let’s say you like the Direct Line range, you think it’s heading back towards 301p again. You decide to sell exposure to £10,000 worth of Direct Line using a CFD, at the current price of 323p. To do this, you need £2,000.

Let’s assume Direct Line falls back to 301p (-6.8%). Your profit would be £680, 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. Direct Line rises 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.