May 29

Allianz Expects Further Corrections

Allianz (XETRA:ALV) declines in May’s last trading session, supporting the progress in a mid-term corrective structure.

In a Short-term Elliott wave perspective, Allianz advances in a corrective sequence that began on February 21st when the price topped at €232.60 per share starting an aggressive sell-off, which dragged to ease over 49% of its stock value.

ALV, in its 2-hour chart, exposes the incomplete horizontal triangle corresponding to wave B of Minor degree labeled in green. This Elliott wave pattern started on March 19th, when the German financial company found fresh buyers at €117.10 per share, from where the price action developed an upside in a three-wave sequence topping at €177.40 on late April, completing a wave ((a)) of Minute degree labeled in black.

Once ALV reached its highest level since March 12th, the price started to drop developing downward sequence identified as wave ((b)) in black bounded in a descending channel. Allianz found support at €139.78 per share, being higher low compared to the March bottom.

The upward reaction led Allianz to jump over the upper-line of the descending channel drove the price action to develop a new three-wave structure, which corresponds to its wave ((c)) in black. Currently, the price action eases, testing the base-line of the ascending channel, which leads us to conclude that the upward leg corresponding to wave ((c)) seems to be ending.

The extended first leg of the triangle pattern in progress implies that the market reacted facing the massive sell-off started on February 21st. In this context, the short extension of wave ((b)) in black warns us that market participants could not be interested in continuing to extend the drops. On the other hand, considering the alternation principle, since the first developed decline was extended in terms of price, we expect that wave C (green) should be shorter than wave A (green) in terms of price. If the price breaks below the intraday ascending channel, Allianz will activate the downward motion in its wave ((d)) of Minute degree labeled in black.

Finally, the market bias will continue on the bearish side while the price remains below €232.60. At the same time, if the price soars and closes above €190.22, ALV could be starting to show recovery signals.