Jun 05

BBVA Reaches its Highest Level Since Mid-March

The Spanish bank BBVA surges on Friday session over 8%, rising to €3.496 per share, its highest level since March 12th. The big picture under the Elliott Wave perspective, reveals that the Spanish bank progresses in a third wave. However, the consolidation region of early March proposes a temporary pause for the rally developed.

BBVA, in its 2-hour chart, shows a  strong rally after the last bearish sequence that started on February 12th, when the Spanish bank found fresh sellers at €5.339 per share.

In the figure, we observe that BBVA developed a massive sell-off that lead it to lose over 53% of its stock price. The bearish five-wave sequence corresponding to wave((c)) of Minute degree identified in black, ended on May 20th when the Spanish bank found support at €2.457 per share.

At the same time, BBVA reveals that the advance developed in its fifth wave of Minuette degree identified in blue corresponds to an impulsive terminal structure characterized as an ending diagonal pattern. According to the Elliott wave theory, the ending diagonal pattern is an impulsive terminal formation that tends to appear in waves five and C. This impulsive pattern characterizes by its five overlapped internal segments, which follows a 3-3-3-3-3 sequence.

Once BBVA found fresh buyers at €2.457 per share, the Spanish bank developed a bounce which, after the breakout of the upper trendline that connects the end of waves ii with iv in green, validated the start of a new upward cycle. At the same time, the RSI oscillator shows a bullish breakout of the descending channel, which confirms the bullish sentiment on BBVA.

BBVA completed its first impulsive movement of Subminuette degree on May 28th, when the price found resistance at €2.999 per share. The retracement experienced by the Spanish bank reached the 38.2% of the advance developed by the first rally. This context leads us to observe that BBVA currently advance in an extended wave.

On the other hand, the consolidation zone from the first decline shown in the blue stripe, makes us suspect that this region could provide a resistance zone to BBVA on its short-term bull cycle. The potential exhaustion movement is accompanied by the RSI reading, which moves above the 80 level. The thrust over the upper line of the intraday ascending channel leads us to conclude that BBVA’s price is overbought.

To conclude, considering that BBVA shows signals of strength, but presenting overbought signals, our preferred positioning remains neutral until the price action shows a corrective movement. The end of this corrective leg could be a good place to find entries on the bullish side.