Stock of the day: BMW

We start the new week with analysis on BMW, which we’d previously analysed in beginning of March. Back then, the price was flirting with a crucial horizontal support and we saw potential for a major sell signal. This is how we concluded our analysis:

“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.”

It didn’t take long for the price to create a major sell signal. In fact, it happened the next day! The next few days after that, the price dropped from around 83 EUR to the 68 EUR on March 7^th. Pretty nice for a sell signal if you ask me.

What’s worth noticing is how efficient the Fibonacci levels are. You can see that 38,2% is an absolutely crucial resistance and the 50% is currently the closest support. That makes our trading a lot easier.

Technically, one could think about buying when the price comes back above the 38,2%, and could think about selling when the price bounces off 38,2% and breaks the 50% Fibonacci.

The general sentiment is still negative, so sellers have a bigger chance of success at the moment.