Sergey Kamenshikov, Ph.D.
IFC Markets
Drag on carmaker’s earnings
Volkswagen was sued by US Justice Department on Monday for allegedly installing illegal emissions defeat devices in certain diesel vehicles sold in US. The carmaker hopes it will come to an agreement with US regulators on how it will fix the affected cars. How far will fall the stock of the world’s major carmaker?
Last September Volkswagen was accused of installing emission test-cheating software in certain diesel models in US. US Justice Department filed a lawsuit for up to $48 billion against the German car maker on Monday, alleging it installed the illegal devices in nearly 600,000 vehicles. Volkswagen assumes it will have to buy back about 115,000 cars in the United States as a result of the emissions scandal. The car maker expects that the rest of the vehicles will need major refits, which will amount to significant costs. World’s largest car-maker by sales boasts of $138.74 billion of enterprise value and $56.75 billion of market capitalization. Nevertheless a possible hefty fine and significant expenses in order to bring nearly 500,000 diesel vehicles into compliance with US emissions laws will have a negative effect on company’s stocks. The company plans also to repair by the end of 2016 about 8.5 million diesel cars sold in Europe.
USDCHF
VOW: D1 had been recovering after a 40% slump in second half of September as the scandal about emission tests broke out. It has been falling since Monday on the daily chart when it closed down about 4% after the US Justice Department filed the lawsuit. The stock has fallen below the support line of the “head and shoulders” chart pattern and last two fractal lows. The Bollinger bands have contracted which may mean lower volatility. The Parabolic indicator and MACD give a sell signal. The RSI oscillator has formed a negative divergence and has not reached the oversold zone yet. We can go short right away. The stop loss can be placed at the fractal high and Parabolic signal at 136.06. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Sell
Sell limit below 113.26
Stop loss above 136.06
Volkswagen was sued by US Justice Department on Monday for allegedly installing illegal emissions defeat devices in certain diesel vehicles sold in US. The carmaker hopes it will come to an agreement with US regulators on how it will fix the affected cars. How far will fall the stock of the world’s major carmaker?
Last September Volkswagen was accused of installing emission test-cheating software in certain diesel models in US. US Justice Department filed a lawsuit for up to $48 billion against the German car maker on Monday, alleging it installed the illegal devices in nearly 600,000 vehicles. Volkswagen assumes it will have to buy back about 115,000 cars in the United States as a result of the emissions scandal. The car maker expects that the rest of the vehicles will need major refits, which will amount to significant costs. World’s largest car-maker by sales boasts of $138.74 billion of enterprise value and $56.75 billion of market capitalization. Nevertheless a possible hefty fine and significant expenses in order to bring nearly 500,000 diesel vehicles into compliance with US emissions laws will have a negative effect on company’s stocks. The company plans also to repair by the end of 2016 about 8.5 million diesel cars sold in Europe.
USDCHF
VOW: D1 had been recovering after a 40% slump in second half of September as the scandal about emission tests broke out. It has been falling since Monday on the daily chart when it closed down about 4% after the US Justice Department filed the lawsuit. The stock has fallen below the support line of the “head and shoulders” chart pattern and last two fractal lows. The Bollinger bands have contracted which may mean lower volatility. The Parabolic indicator and MACD give a sell signal. The RSI oscillator has formed a negative divergence and has not reached the oversold zone yet. We can go short right away. The stop loss can be placed at the fractal high and Parabolic signal at 136.06. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Sell
Sell limit below 113.26
Stop loss above 136.06
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
Recommended Content
Editors’ Picks
EUR/USD turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.