Rheinmetall’s Technical Warning Flashes as Analysts Pare Targets but Stay Bullish

Rheinmetall gains 9% but shooting star candlestick and overbought RSI warn of exhaustion. Analysts still bullish with reduced targets, but stock down 25% in 2026; resistance at €1,240.

A near-9% weekly gain would normally be cause for celebration, but for Rheinmetall shareholders it came with a red flag. The stock closed Friday at €1,221.40, carving out a bearish candlestick pattern that technicians call a “shooting star” – a formation often signalling short-term exhaustion after a sharp rally. The relative strength index has climbed to 85.6, deep into overbought territory, suggesting the momentum may be running out of steam.

The warning comes despite a chorus of buy ratings from major investment houses. Jefferies slashed its price objective from €2,220 to €1,890 but kept the stock at “Buy”. UBS made an even deeper cut, lopping €600 off its target to land at €1,600, while maintaining a buy recommendation. Barclays remained the most optimistic among the trio, reaffirming “Overweight” with a €2,035 target. All three see significant upside from current levels, even after trimming their forecasts.

Yet the market’s mood has soured dramatically since the start of the year. Rheinmetall shares have lost nearly a quarter of their value in 2026, and they trade roughly 39% below the 52-week high of around €2,000. A new resistance zone has formed just above €1,240 – a level the stock has tested repeatedly in recent sessions without a clean break. If the shooting star pattern plays out, the next support lies near the 52-week trough of €1,118, hit only in mid-May.

Structural headwinds are adding to the caution. Europe’s biggest carmakers – Mercedes-Benz, Volkswagen and BMW – are muscling into the defence market. Mercedes already supplies military trucks to the Bundeswehr, while KNDS, a rival armoured-vehicle maker, is exploring the use of automotive factories for tank production. The influx of deep-pocketed industrial players threatens to erode the established market share of pure-play defence groups like Rheinmetall. Meanwhile, the energy-price shock stemming from the Iran conflict continues to weigh on Germany’s industrial base, creating an additional drag on the broader economy.

Geopolitical signals remain a mixed bag for defence stocks. The Ukraine war provides steady structural demand for ammunition and military equipment – core Rheinmetall products – with Kyiv reporting drone strikes on Russian oil infrastructure and Moscow threatening retaliation. On the other hand, the US and Iran have made progress in talks over a 14-point memorandum, and a ceasefire has been in place since early April. Any diplomatic breakthrough there could trim the sector’s risk premium, even though NATO rearmament and the Ukraine conflict remain fundamental demand drivers.

Investors will now turn to upcoming industry events for clues on the trajectory. A conference on Ukraine reconstruction is scheduled for May 28 in Magdeburg, followed by the East German Economic Forum starting May 31, where defence investment will be a key theme. In a news-rich environment, Rheinmetall needs to punch through the €1,240 barrier to regain confidence. Failure to do so could trigger further selling pressure, leaving the stock to test the recent low and the patience of those still betting on the long-term order-book story.