Stock of the day: BMW

Today I’d like to show you a very handsome setup on the German carmaker BMW. Recent movements on BMW have been very technical and the price seems to be respecting all major price action principles.

We can see that since mid-January, the price has been going down. At the beginning of March, a bullish correction started and it’s this correction that I’d like to focus on in this analysis. This correction has formed a very nice wedge pattern (black). The wedge has managed to retrace 50 % of the major drop and has also managed to test the crucial horizontal resistance on the 83.4 EUR (blue). Usually in these cases, traders start looking for the end of the correction and come back to a major bearish trend.

This comeback will be more probable once the price breaks the lower line of the wedge, and that’s the signal that we’re currently waiting for here. The price breaking from the wedge to the downside will be a strong sell for BMW.

On the other hand, the price climbing back above the blue resistance will be a signal to buy but this scenario is less likely to happen.