Stock of the day: Lufthansa

This week in stocks has already been extremely interesting, and it’s only Tuesday! Yesterday we had a small panic and today we’re experiencing a small bullish correction, a small one with some instruments, and more significant with others.

One of those instruments is Lufthansa. We previously mentioned Lufthansa on August 2nd and back on that day we were bearish:

“As long as the price stays below those two, the sentiment is definitely negative and we have no grounds to change our original outlook on this instrument.”

That was written when Lufthansa was around 9.6 EUR and that signal was spot on. Over the next few weeks, the price dropped towards the 7.8 EUR mark. But that mark could be it for sellers, because over the past few days we’ve been experiencing a bullish correction, and to be honest with you, it’s been quite an impressive one at that.

So the price managed to bounce from the lower line of the flag and test the upper line of this pattern. The price is also testing the horizontal resistance on the 9.2 EUR (green).

So we’re below two important resistances at the moment. Is it a good place to buy? No, for two reasons: First of all, one should never buy below resistance. Second, we’re still in a proper downtrend. The buy signal will be triggered when the price breaks the green line. That’s not so unlikely, so stay sharp!