Market Analysis

Could the creation of a new auto giant pose a challenge to Volkswagen’s market position?

With 10.8 million cars sold, Volkswagen is still the global leader in terms of sales figures, closely followed by Toyota with 10.6 million vehicles sold in 2018. However, this could change with talks between Fiat Chrysler Automobiles and Renault of a possible merger to form the world’s largest automaker. Together, these two sold more than 15 million vehicles in 2018, so the newly merged company would likely drive Volkswagen from the top spot.

Since reaching a high of over €260 in March 2015, the VW share has had to give way. As a result of the diesel-gate scandal, among other things, the stock has now lost over 50 percent of that peak value.

In October 2017, the share made its first successful attempt at overcoming the barrier at €146 and then meandered around that level.

Since mid-January 2019, the market then showed further higher prices, before the market slipped again into a downward movement. Between the end of April and the beginning of May, the VW share showed a kind of ‘double top’, which led to a stronger downward movement.

The market reached a temporary low of €140 last Thursday and has now worked its way up to the significant structural level of €146.

This level is crucial for further development, as, in the past, this area formed a barrier that the market could not overcome for several months.

If the market now succeeds in making a sustained leap above €146, further structural levels could wait at €149.50, €152, and €155.

However, if the bulls are not strong enough and the market continues to go down, support could be at €143 and €140 respectively. Another barrier that could have a supporting effect on the market is in the zone at €136. If the market breaks through here, the further downward potential could develop.

The MACD oscillator is in negative territory, and the histogram shows that it may be approaching its zero lines.

VOW3.GE - daily chart. Source: ActivTrader

VOW3.GE Daily Chart | Source: ActivTrader


Written by Daniel Schuetz, External Analyst, ActivTrades

*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided.