Looking at the technical picture of the Continental AG stock (ETR: CON) on our 4-hour chart, we can see that it reversed higher, after finding support near the 90.06 hurdle in the beginning of last week. The stock seems to have formed an inverted head-and-shoulders pattern with the “neckline” being the short-term tentative downside line drawn from the high of September 17th. That “neckline” was broken today, this way possibly clearing the path to some higher areas. From the near-term perspective, we will aim for higher areas, but let’s not forget that this move north could be classed as a temporary correction, because CON continues to trade well below a short-term downside resistance line taken from the high of June 7th.
If the share price remains above the so-called “neckline”, this may keep the buyers interested and help bring the stock higher, towards the 97.60 obstacle, or to the 99.80 zone, marked by the high of September 16th. Around there CON could stall for a while, or even retrace back down a bit. That said, if the share price continues to respect the short-term tentative upside support line drawn from the low of September 22nd, that may keep the upside scenario as the main one on the table. If this time the stock is able to overcome the 99.80 area, the next potential target might be at 104.34, which is the low of September 4th.
The RSI and the MACD are pointing higher. However, the RSI is still slightly below 50 and the MACD is well above the trigger line but remains below zero. Both oscillators show that the downside momentum is slowly fading away, what might support the above-discussed scenario later on.
In terms of the downside, a drop back below the previously mentioned upside line, may open the door to some lower areas, especially if CON also falls below the 93.30 zone, marked by Friday’s low. That’s when we will aim for the current lowest point of September, at 90.06, a break of which would confirm a forthcoming lower low and could set the stage for a test of the 88.30 level. That level is marked by the lowest point of October 2020.
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