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by Darius Anucauskas

Can Bayer AG Find A Cure for Its Stock in the Long Run?

Bayer AG (ETR: BAYN) has been caught up in various lawsuits, which started last year and are dragging till this day. This has to do with their acquired company, Monsanto, which produces a weed-killing liquid, named “Roundup”, that, apparently, can cause cancer if someone is exposed to it for too long. This, of course, has hit Monsanto strong, which had a domino effect on Bayer as well, given that it is Monsanto’s owner.

From the technical side, the beaten-up stock of Bayer AG finally found some support on the 27th of December 2018, near the 58.20 hurdle, from which the price rebounded. Now, BAYN is trading above its newly-established short-term upside support line, taken from the low of that day. In our view, the stock could continue climbing higher, but only for a while more, as the upside might get limited due to the medium-term downside resistance line, taken from the high of the 22nd of May.

A good push above the 66.50-euro price barrier may clear the way back to the 71.70 hurdle, where the stock got held in November last year. If this time the stock sees that barrier only as a temporary pit-stop for the buyers to refuel, a break above it could lift the share price to its next potential area of resistance at 76.45, marked by the low of the 22nd of October 2018. Slightly above runs the aforementioned downside line, which could provide good resistance for BAYN.

Looking at our oscillators, the RSI is currently above 50 and points to the upside. The MACD lies in the the positive territory and slightly above its trigger line, pointing higher as well. Both indicators suggest that the momentum is picking up.

Alternatively, if the previously-mentioned short-term upside support line breaks and the price drops below the 62.10-euro price tag, this may be seen as a sign of weakness, which could lead to further declines. This is when we will target the December low again, at 58.20, a break of which could set the stage for creating a lower low. The next potential area of support could be the 55.10 level, marked by the high of the 23rd of April 2012.

Bayer daily


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