Aston Martin reverse to retest key support cluster
Aston Martin Lagonda Global Holdings (LSE:AML)
Aston Martin’s share price had raced higher during the summer after Chinese carmaker, Geely doubled its stake in the historic British brand.
Geely, a long-standing admirer of Aston Martin, had previously made multiple attempts to acquire the company. In May, Geely acquired 42 million shares from Aston Martin's ownership consortium, solidifying their investment while providing components and technology to the automaker.
However, recent market dynamics have caused Aston Martin's share price to reverse course, experiencing a substantial pullback from its summer peak of nearly £4. This extended retracement has brought the stock into close proximity to a cluster of support levels.
Firstly, there's the gap that emerged in May after Geely's investment, which has now been closed. During the recent gap-closure phase, several long-tailed bullish hammer candles have appeared, indicating potential reversal signals.
Secondly, the Volume Weighted Average Price (VWAP) anchored to the key October lows assumes significance, as it reflects the average price of buyers who entered just before the Geely rumours surfaced.
Lastly, we find swing support, which represents the psychologically important £2 level. This confluence of support levels is likely to attract the attention of long-term investors, and it remains to be seen whether it will be sufficient to reverse the recent pullback.
AML Daily Candle Chart
Risk management
It's essential to remember that support and resistance levels serve as guides and are not foolproof guarantees. While technical analysis is valuable, it should complement fundamental analysis. It's noteworthy that Aston Martin is currently a loss-making company, making it susceptible to short sellers.
Additionally, please take into account that Aston Martin is scheduled to release its Q3 2023 Earnings on Wednesday, November 1st.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.
Aston Martin’s share price had raced higher during the summer after Chinese carmaker, Geely doubled its stake in the historic British brand.
Geely, a long-standing admirer of Aston Martin, had previously made multiple attempts to acquire the company. In May, Geely acquired 42 million shares from Aston Martin's ownership consortium, solidifying their investment while providing components and technology to the automaker.
However, recent market dynamics have caused Aston Martin's share price to reverse course, experiencing a substantial pullback from its summer peak of nearly £4. This extended retracement has brought the stock into close proximity to a cluster of support levels.
Firstly, there's the gap that emerged in May after Geely's investment, which has now been closed. During the recent gap-closure phase, several long-tailed bullish hammer candles have appeared, indicating potential reversal signals.
Secondly, the Volume Weighted Average Price (VWAP) anchored to the key October lows assumes significance, as it reflects the average price of buyers who entered just before the Geely rumours surfaced.
Lastly, we find swing support, which represents the psychologically important £2 level. This confluence of support levels is likely to attract the attention of long-term investors, and it remains to be seen whether it will be sufficient to reverse the recent pullback.
AML Daily Candle Chart
Risk management
It's essential to remember that support and resistance levels serve as guides and are not foolproof guarantees. While technical analysis is valuable, it should complement fundamental analysis. It's noteworthy that Aston Martin is currently a loss-making company, making it susceptible to short sellers.
Additionally, please take into account that Aston Martin is scheduled to release its Q3 2023 Earnings on Wednesday, November 1st.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.