May 13

Allianz Builds a Second Bearish Leg

Allianz (XETR: ALV), the German financial services company, in its short-term picture, shows a corrective sequence that looks like a second bearish leg.

Allianz, in its 2-hour chart, exposes a downward sequence, which is retracing the leading diagonal structure that the financial company began on March 19th when ALV found fresh buyers at €117.10 a share.

From its March’s low, ALV developed an upward five-wave sequence of Minuette degree labeled in blue. With the surpassing of the upper guideline of the leading diagonal that joins the waves (i) and (iii), Allianz finished its fifth wave (labeled in blue), and at the same time, completed a wave ((i)) or ((a)) of Minute degree identified in black.

Once the price ended its first bullish sequence of upper degree at €177.40 per share, Allianz began to experience a corrective movement.

Currently, the German financial company declines in its wave (c) of Minuette degree identified in blue, which at the same time, progress in its third internal wave of Subminuette degree labeled in green.

The downward trendline that connects the origin of the corrective sequence with the end of the wave (b) in blue makes us conclude that the intraday bias remains in the bearish side.

At the same time, the RSI oscillator looks with an extreme oversold, which confirms that Allianz moves in its third wave of Subminuette degree. In this context, ALV should develop a consolidation structure before the last decline, which could create a bullish divergence. Once Allianz completes this bearish sequence, the price will end the wave ((ii)) or ((b)) od Minute degree in black.

For the following trading sessions, we expect a limited decline. After the corrective structure completion, ALV should give way to an upward five-wave sequence corresponding to wave ((iii)) or ((c)) in black. Likely, the price action would carry to ALV to fill the opened gap between the €182 to €189 range.