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Aston Martin reverse to retest key support cluster

By Capital.com News

09:00, 17 October 2023

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Any material provided is for information purposes only and is not investment advice. Any opinions that may be provided are not a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided. If you rely on the information on this page then you do so entirely on your own risk.

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

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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.

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Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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