Stock of the day: Continental AG
27 June 2023
In today's technical analysis, we turn our attention to Continental AG, a prominent European automotive manufacturing company. Even though the company's stock recently created a bullish reversal pattern - a hammer candlestick - we're far from giving a major buy signal. Instead, the situation seems rather the opposite.
Let's take a closer look at the chart. Here we see a yellow rectangle pattern that spans from mid-March to mid-June. This pattern was broken with an upward breakout of the resistance, marked in blue. However, this breakout proved to be false - a factor that we've highlighted on the chart with a red square.
Unfortunately, the price failed to maintain its position above the blue support line, and subsequently fell below it. This reentry into the rectangle pattern is generally a negative sign. Despite the presence of yesterday's hammer, the sentiment appears bearish, as the price has returned to the interior of the rectangle.
Looking ahead, we can anticipate that the stock price will likely test the lower boundary of the rectangle, marked in orange, but not before it tests the black uptrend line. Overall, the sentiment for Continental is bearish, with higher chances of a decline rather than a rebound above the blue resistance.