Jun 05

Siemens Could Take a Breath

Siemens (XETRA:SIE) rallies in a corrective structure calling for limited upsides in the following trading sessions. The big picture under the Elliott wave perspective reveals a corrective formation of a Minor degree, which currently advances in the second segment of its three-wave structural series.

The figure shows Siemens in its 4-hour timeframe developing a downward corrective structure that began in mid-December 2019 when the price topped at €119.90 per share. This downward trend identified as wave A of Minor degree labeled in green, found support at €58.78 per share on March 19th when Siemens lose more than 50% of its stock price.

Once Siemens found fresh market participants interested in pushing higher the price, SIE started to show recovery signals and develop a bullish corrective structure corresponding to wave B in green. This wave remains incomplete, and its internal structural series corresponds to a zigzag pattern.

According to the textbook, a zigzag pattern is a corrective formation that follows a 5-3-5 subdivision structure. In this context, in the previous chart, we distinguish that the zigzag pattern developed by Siemens advances in its wave ((c)) of Minute degree, labeled in black.

Concerning its wave ((b)), we observe that Siemens developed a continuous contracting triangle, which reveals not only the bullish momentum that carries the price action but also the interest of market participants in continuing to push higher the price.

The last affirmation is confirmed by the wave ((c)), which exhibits a higher upward momentum than wave ((a)), which developed its movement as a leading diagonal pattern. On the other hand, we recognize the alternation principle in both upward legs. While wave ((a)) advances at a slow pace, wave ((c)) soars with higher momentum, as compared to wave ((a)).

The ascending channel projected from the origin of wave B in green leads us to expect further upsides for Siemens. However, the consolidation area observed in the bearish sequence developed in wave A, marked with the blue box, makes us foresee a potential resistance zone between €106 to €108 per share.

In this context, considering the first downward move corresponding to wave A and the advance of wave B, we conclude that Siemens could be developing a regular flat pattern, which follows a 3-3-5 internal sequence. Therefore, once the price completes the current upward move in progress, Siemens should develop a downward movement subdivided into five waves corresponding to wave C in green.

In conclusion, considering Siemens’s limited potential upside and the possible decline that the price could develop, our preferred positioning remains neutral, expecting new descents.