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Bayer AG (BAYN.DE) drug manufacturer in a nosedive

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  • Bayer AG (BAYN.DE) drug manufacturer in a nosedive

    ISIN: DE000BAY0017

    Bayer AG is a leading global company in the sectors of health and agriculture. The group’s wide range of products and focal points of research are directed towards healthcare, crop protection and pest control. Business operations take place in the areas of pharmaceuticals, consumer health and crop science including the subdivision of animal health. At the end of 2016, Bayer formed its MaterialScience spin-off segment with high-end materials and recorded it as an independent company on the stock exchange under the name Covestro. In mid-September 2016, Bayer and the American agrarian group Monsanto signed a merger agreement.

    The following analysis will examine the stock of the company from a chart-related perspective.

    Review (daily chart):

    At the latest since February, the stock of the company has found itself in a large, intact downward trend. A clearly visible downward trend is also running in the subordinate trend size, and has by now already been confirmed several times. The strong downwards movements, accompanied by the high volume, which in the upward corrections is more falling than anything, are clear signals for continued weakness in the company’s stock. Currently, the Bayer stock has corrected almost the entire last downward movement, such that cheap entries are available in the short direction. The potential target prices are depicted in the chart.




    Outlook hourly chart

    In the hourly chart, we can see the currently running correction, which has yet to develop in our preferred trading direction.

    For a short entry, we should wait for the formation of a signal, e.g. in the form of a P2, and place the stop loss above the last P3 (depicted in green).
    Alternatively, and with the advantage of a cheaper stop, one can also practice trading from out of the correction or the formation of a reversal candle at a significant point.

    The first target is located in the area around €91.80 (see green zone in the daily chart). A continuation of the trend to the next target at approx. €86.50 is definitely a possibility.

    If the price considerably exceeds the last significant high at €99.65, one should abandon the short scenario for the time being (see red zone in the daily chart).




    Before trading, one should consider news in the environment and from the company. Similarly, one should also observe the development of the overall market.

    Disclosure of possible conflicts of interest: at the time of publishing this analysis, the author is not invested in the securities or underlyings discussed.

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