Stock of the day: Volkswagen
06 February 2023
Let us start this week with an analysis of Volkswagen, whom we previously analysed at the end of June 2022. Back then, the price was flirting with the key support on 185 EUR and we were waiting either for a bounce, or a breakout. This is how we concluded the previous piece:
“On the other hand, there’s the breakout of the yellow support, so the price closing a day below the yellow area would be an amazing selling opportunity. The best option seems to be to wait and see what will happen with this support. A proper bounce would be a positive sentiment and a breakout a negative one.”
Volkswagen chose the bearish option and the price dropped significantly, especially at the end of the year, when we reached an area below 144 EUR. Technically, it happened to be a false breakout (purple) below the 162 EUR (green) support after several weeks. False breakouts are usually a great signal in the opposite direction, and in case of Volkswagen, they can lead to positive sentiment. All we need here is a breakout of the major down trendline connecting lower highs since October 2021 (blue). The chances of that happening are quite significant.