A range trading opportunity for you?

Will Severn Trent break support, or will it rise again back to 2081p?

• Range developed over last 5 months
• Bounced off 1842p zone 11 times. Now trading 1881p (at time of writing)
• Will the pattern repeat itself, testing previous highs?
• Shares -13.8% from 2018 highs; +12.9% from 2018 lows; -13% year-to-date
• Utilities tend to be considered defensive/non-cyclical, helpful in times of uncertainty about economic groth
• Water companies recently published 2020-25 business plans, planning to cut bills and invest more

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Trading Severn Trent – An Example

Let’s say you like the range, you think it’s heading back towards 2081p again. You decide to buy exposure to £10,000 worth of Severn Trent using a CFD, at the current price of 1881p. To do this, you need £2,000.

Let’s assume Severn Trent recovers back to 2081p (10.6%). Your profit would be £1,060, 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 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.