Stock of the day: Volkswagen

We are approaching the moment of truth on Volkswagen’s chart. It looks like the boring sideways trend, which has been with us since March is coming to an end. What signals are pointing in that direction?

First of all, you can see that Volkswagen is approaching the end of a descending triangle pattern (upper blue, lower yellow). That’s the boring sideways trend I just mentioned. Triangles have this feature that it gets more boring with time, so as we move to the right, the volatility drops.

Most recently, the price bounced again from the horizontal support and is most probably approaching the upper band of the triangle right now. The way to trade triangles is to wait for the breakout. So, if the price closes a day above the upper blue line it would be a signal to go long. On the other hand, if the price closes a day below the yellow support, it would be a signal to sell.

For now, it seems that the smartest option would be to wait for the breakout. There’s no reason to trade upfront if the direction of the breakout is only a guess at the moment