What is the right thing to do?

In the scenario depicted, it appears you are approaching a roundabout. According to German traffic rules, when entering a roundabout, you must indicate your direction (choice 1). Additionally, vehicles already in the roundabout typically have priority, meaning you must yield to them (choice 2).

The yellow car you see is already in the roundabout, so it must be given priority, and you should wait for it to pass before entering (choice 2). This ensures the flow of traffic and prevents accidents within the roundabout.

Therefore, both indicating your turn and yielding to the vehicle in the roundabout are correct actions to take. Understanding these rules helps maintain safety and order on the roads.