Market Analysis

Daimler: Will new negative reports stop the bulls?

Daimler, one of the best-known German car manufacturers, ended the week with a positive result. The market closed at €56.84 near the significant structural level.

Then at the weekend, reports hit the wire that the company was involved in further exhaust gas manipulation. The German Federal Motor Transport Authority is checking whether the company has again used software to adjust test exhaust gas values downwards. According to media reports, the Authority has initiated a formal hearing against Daimler.

Can this new development, in conjunction with the global slowdown in economic growth, slow down the bulls at Daimler?

A glance at the chart shows that in January the share was able to stop the downward trend that had lasted for almost a year, and since then has gained more than €10. The current trend has already tested its upward trend line on several occasions but was able to push away clearly with the candle from last Friday. The market tested the highs from late August and early October 2018.

Looking at the MACD oscillator, the MACD line is above its trigger line. However, the histogram is interesting. It shows a falling trend, though prices rose sharply on Friday. A possible divergence could result. According to the textbook, such a divergence is usually resolved in the direction of the indicator, in this case – bearish.

The current structural line at around €56.85 could be decisive for the further upward development of the market. If the market makes a sustainable jump above this line, then important structural resistance areas could be expected around €60.60 and €64.40.

However, if the bears take over and the market cannot exceed the current structural area, then in the area of €53.40 to €52.30 there is a structural zone waiting that could support the market. If the market breaks down here, there could be further support at €49.10, but if the market breaks through here as well, the scenario could cloud over, and a new assessment would be necessary.

DAI.DE Daily Chart | Source: ActivTrader

DAI.DE Daily Chart | Source: ActivTrader


Written by Daniel Schuetz, External Analyst

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