After a strong reversal to the downside in the end of July, the Volkswagen AG Preference Shares (ETR: VOW3) continue to drift lower. But up until today, the stock was still trading above its medium-term upside support line taken from the low of October 25th, 2018. Now, the share price is below, not only that line, but also below one of its key support areas, at 138.00, which is the low of June 3rd. If the price closes today below that zone, this increases VOW3’s chances to move further south, hence why we will remain bearish, at least for a while more.
If the strong selling continues, the stock may end up moving all the way to the 134.10 hurdle, which is the lowest point of January. This is where the share price might stall, or even correct back up a bit. But as long as VOW3 stays below the aforementioned upside line, we will continue targeting the downside. Once again, the stock might drift towards the 134.10 zone, a break of which could open the door to the 132.45 level, marked by the lowest point of October last year.
Our oscillators, the RSI and the MACD, suggest that there still may be a possibility for a further move down. The RSI is below 50 and currently points to the downside. The MACD is also pointing lower, while sitting below zero and its trigger line.
Alternatively, if the price reverses and moves back above the previously-discussed upside line, this may interest new investors to join, especially if the stock pushes above the 140.80 hurdle, which is the low of August 5th. This is when VOW3 could accelerate further up, aiming for the 145.15 area, a break of which could lift the share price to the 147.95 barrier, marked near the high of August 2nd. The stock could also test the 200-day EMA around there, which may help keep the price down.
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