Today’s stock of the day is Volkswagen, a company we analyse here quite often. We’re coming back to this German carmaker because its stock is currently on a key support and what happens here depends on the long-term price of this company.
First, a little bit of history. One year after the Covid crash, VOW grew amazingly! From below 100 EUR to over 350 EUR per share. Since March 2021, we have a correction of that movement. A correction which in 2022 reached a crucial support – an area around 185 EUR (yellow). It’s currently the third time we’re testing this level. We’ve already done that in March and May. In both cases, we had a bounce. So the question is, will that happen in June as well?
The answer to that question can give us a great trading opportunity. So far, the price is holding above, which creates an interesting buying opportunity. The opportunity comes with a great risk to reward ratio, where the stop loss could be below the June lows and the take profit far on the orange resistance around 245 EUR. On the other hand, there’s the breakout of the yellow support, so the price closing a day below the yellow area would be an amazing selling opportunity.
The best option seems to be to wait and see what will happen on this support. A proper bounce would be a positive sentiment and a breakout a negative one. Let’s see what the next few days will bring us.