Volkswagen AG Stock Is Feeling The Heat

by Darius Anucauskas
11:26, 2020/07/31

After a heavy fall seen from the end of February till mid-March, the second largest automaker Volkswagen AG Group (ETR: VOW3) managed to recover some of its losses made in that period. From around the end of March, the VAG common stock rose around 60% and in the beginning of June the share price found resistance near the 162.90 barrier, from which it started declining again. Yesterday, the stock fell sharply after the company released its earnings report, where it showed an operating loss of 800 million euros, due to a strong drop in sales over the first half of 2020. From the technical side, VOW3 is now approaching one of its key support areas, at 133.20. Although the stock is currently experiencing weakness, we would prefer to wait for a break of that support area first, before examining larger extensions to the downside.

A heavy move below the 133.20 territory may spook new buyers from entering. If so, a further decline could bring the share price to the 127.90 obstacle, marked by the low of May 15^th. If that obstacle is not capable to halt the slide and breaks, the next potential support level that we might aim for could be at 123.80, which is the lowest point of May.

Looking at the RSI and the MACD on the 4-hour chart, we can see that both indicators continue to point lower. In addition to that, the RSI is running well below 50, near 20. The MACD remains below zero and its trigger line. Both oscillators suggest increasing downside price momentum, which comes inline with the idea discussed above.

Alternatively, if the stock suddenly gets a boost back above the 143.10 barrier, marked by yesterday’s high, that may give a bit of confidence to more new buyers. VOW3 may then drift to the 144.80 obstacle, a break of which could send the price to the 147.90 hurdle, which is the high of July 29^th. The stock might stall there temporarily, but if the buyers are still active, a further push north could bring the share price to its next possible resistance, at 150.40. Around there, VOW3 could test a short-term tentative downside resistance line, which may provide a bit of resistance. If that downside line holds, this whole move higher could be considered just as a corrective one before another leg of selling.

Disclaimer:

The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.

There are risks involved with trading of cash equities. Past performance is not indicative of future results. You should consider whether you can tolerate such losses before trading. Please read the full Risk Disclosure.