Is this breakdown a good trade for you?

Will Provident Financial turn, or will it continue to fall beyond 560p?

• The chart shows the last 8 month’s price action for Provident Financial
• The shares have broken below a support level at 579p to trade 561p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares fall back to Feb 414p lows?
• Shares -29.6% from 2018 highs; +36.9% from 2018 lows; -14.6% year-to-date.
• 22 Aug: Berenberg says Provident Financial faces lower risk from regulation
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Provident Financial– An Example

Let’s say the breakdown appeals to you, you think it’s likely to continue. You decide to sell exposure to £10,000 worth of Provident Financial using a CFD, at the current price of 561p. To do this, you need £2,000.

Let’s assume the Provident Financial trend continues downwards to 414p (-26%). Your profit would be £2600, 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. Provident Financial breaks higher, rising 5% and it hits your stop-loss. Your loss would be £500.

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