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by Darius Anucauskas

Can BMW Drive Itself a Bit Higher by Year End?

The German car maker, BMW AG (ETR: BMW), is not having a best performing year, as the stock has been on a gradual decline since January’s peak, formed on the 22nd of the month. This where we can draw a long-term downside resistance line from. At the same time, BMW is trading below another, slightly steeper medium-term downside resistance line, which is drawn from the high of the 17th of May. Given all the negative aspects of the price structure and how it has distanced itself from those above-mentioned lines, the stock has reversed strongly back to the upside, after reaching a low near 69.65 last week. From the short-term perspective, there is a good chance to see a bit more recovery, where we could aim for areas, slightly closer to the medium-term downside line.

A good push back above the 75.00-euro barrier may open the way towards a few higher potential resistance zones, where the first one might be the area around 77.55, marked by the peak of the 3rd of December. If the buying momentum remains and the 77.55 hurdle is no match for the bulls, the share price might continue accelerating and BMW could test the 79.10 level, which was the high of the 2nd of November. Slightly above that lies the 80.40 resistance zone, which is near the aforementioned medium-term downside resistance line that could stall the price.

Looking at our oscillators, the MACD and the RSI, both indicators are showing us positive divergence on the daily chart, which supports the above-discussed idea. The RSI has been trending higher since around the 24th of October and is now hanging around slightly above 50. The MACD, after bottoming in the second half of October, keeps dragging itself towards zero and sits comfortably above the trigger line.

On the downside, if the stock reverses sharply south and drops below 72.25 obstacle, this could lead to a test of the 69.65 hurdle, marked by last week’s low. If that area fails to withhold the price from moving lower, more bears could jump in and drive BMW to the next potential support barrier, near the 67.15 level, marked by the inside swing high of the 7th of July 2016 and the low of the 16th of June the same year.

BMW daily


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