Stock of the day: BMW

European stocks are giving back gains from the opening bell. The situation is still far from certain and we may expect that the next few weeks will be volatile and choppy. Today’s stock of the day is BMW, which we previously analyzed in September 2021. Back then, the price was 91 EUR and we were bullish:

“The last two days, brought us a breakout of a major down trendline (red) and the neckline of the inverted Head and Shoulders pattern (blue). Both of those actions bring us a positive sentiment and a legitimate buy signal.”

It was spot on. You can see that at the beginning of the year, the price reached the psychological resistance on 100 EUR. That was it though. Since then, the price has been declining. We even formed a very pessimistic Head and Shoulders pattern(yellow), which has a great potential to introduce a bearish sentiment.

Actually, the sell signal form the Head and Shoulders pattern is already here but BMW needs one more thing to have a proper long-term sell signal – the bears need to break the horizontal support at 83 EUR (blue).

Once the price closes below the blue line, we will receive a proper long-term sell signal. As long as the price holds above, buyers can still have hope.