Will Drax break support, or will it rise again back to 433p?

• The Drax rising channel range has developed since late June .
• Bounced off rising support 6 times, most recently this week.
• Currently trading 387p (at time of writing)
• Will the pattern repeat itself, testing previous highs?
• Shares -9.85% from 2018 highs; +78.8% from 2018 lows; -43.1% year-to-date
• 16 Oct: Power generation company purchased Scottish Power for £702m from Iberdrola
• 25 Oct: Appointed Andy Skelton as its CFO, effective 2 Jan.
• Source: Bloomberg, FT, Reuters, DJ Newswires

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Trading Drax – An Example

Let’s say you like the range, you think it’s heading back towards 433p again. You decide to buy exposure to £10,000 worth of Drax using a CFD, at the current price of 387p. To do this, you need £2,000.

Let’s assume Drax recovers back to 433p (+11.8%). Your profit would be £1180, 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. Drax falls 5% and hits your stop-loss. Your loss would be £500.

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