After forming a double top in the end of April and the beginning of May, the Volkswagen AG Preference Shares (ETR: VOW3) moved to the downside, reaching the area near its medium-term upside support line drawn from the low of October 25th. But the stock quickly rebounded from there and broke the short-term tentative steep downside line taken from the high of May 2nd. This makes us believe that there could be a good chance for the stock to recover a bit more losses in the short run. That said, before examining higher areas, we would first like to see a clear break and a daily close above the 146.75 level.
As mentioned above, a strong move and a close above the 146.75 barrier, marked near the low of April 4th and near the high of May 21st, could attract more investors into the game. Such actions could give VOW3 a good boost, which may lead to a test of the 152.30 hurdle, or even the 153.70 obstacle, marked by the low of April 30th and the high of May 10th. The stock might get a hold-up somewhere around those lines, or even retrace back down a bit. But as long as the share price remains above the 146.75 area, investors could hold on to their positions. If the VOW3 rises and breaks above the 153.70 zone, this could open the door to the next potential resistance level, at 157.90, marked near the low of May 2nd and near the high of May 6th.
Our oscillators, the RSI and the MACD, seem to be giving us slightly mixed signals. Although the RSI is still below 50, it had rebounded from its lows and is now pointing higher. It looks like the MACD is trying to make a comeback by pointing slightly to the upside, but it still remains below zero and its trigger line, which keeps the possibility of the downside on the table.
Alternatively, if VOW3 reverses and breaks below the aforementioned upside support line, this would also place the share price below last week’s low, at 140.58. This might be the first signal that the stock is not on very stable grounds and could force the price to slide towards the 138.00 hurdle, which acted as a strong bouncing ground in the end of March. If eventually that hurdle fails to hold the stock from sliding, VOW3 may drift all the way to the 134.10 and 132.45 support levels, marked by the lows January 3rd and October 25th respectively.
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