Is this breakout a good trade for you?
Will BHP turn, or will it continue to rise beyond 1803p?
- The chart shows price action for BHP since mid-June
- The shares have broken above a trendline of falling resistance around 1666p
- Currently trading at 1701p (at time of writing).
- The ‘trend is your friend’. Will it continue?
- Shares -1.4% from 2019 highs; +6.5% from 2019 lows; +2.9% year-to-date.
- 8 Jan: Analysts at Citi say miners are much more resilient to a bust than years past, thanks to more efficient mines and better balance sheets.
- 17 Dec: BHP announces $1/share special dividend
- Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal
Trading BHP – 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 BHP using a CFD, at the current price of 1701p. To do this, you need £2,000.
Let’s assume the BHP trend continues to 1803p June highs (+6%). Your profit would be £600, 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. BHP 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.