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by Darius Anucauskas

Bayer Pharmaceuticals – Technical Outlook

After being hit by a few scandals lately, Bayer Pharmaceuticals’ stock (ETR: BAYN) has continued to move lower throughout the first half of this summer. One of the main scandals was around Bayer’s birth control implant, called Essure, which caused more damage to women health than it brought good. The company was forced to pull the product from the market.

Looking at the chart from the technical side we can see that, overall, Bayer has been on a decline since the stock reversed to the downside in April 2015. Certainly, 2017 was a good year for the company, where the stock managed to regain some of its lost ground. But this year has started badly and unless Bayer finds a way how to regain investors’ confidence, the stock could continue traveling south in the long run.

BAYN is stuck between two lines, one being a downwards moving, drawn from the peak of the 24th of January, and the other is an upwards moving, taken from the low of the 26th of March, this way creating a triangle formation, where the stock is slowly moving towards the apex. Also, from the very short-term perspective, we see that Bayer is trying to climb higher to test the upper side of the triangle. For now, it looks like this could be the case.

A break above the key area of resistance around the 96.90 barrier, could open the door towards a slightly higher level, like the 99.05 line, which was the high of the 22nd of June. Above that lies the next potential area of resistance at around 101.35, marked by the peak of the 15h of June. The area also coincides with the upper side of the aforementioned triangle, which could hold the price from accelerating further and push it back down again. This scenario would come in line with the broader negative outlook that floats over the company.

That said, if BAYN continues to slowly climb higher and eventually breaks of the upper side of the triangle, then this could set the stage for the next potential resistance zone between the 104.70 and 105.4 lines. These have been the peaks of the 4th of June and the 22nd of May, respectively. A strong move above those two levels could open the path towards the 110.20 hurdle, which held the price from moving higher on the 24th of January.


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