BBVA (BME:BBVA) advances in a terminal Elliott wave pattern identified as an ending diagonal, suggesting the possibility of a limited decline.
The Spanish bank BBVA, in its 2-hour chart, illustrates a downward sequence that looks like a bearish impulsive wave that began on February 12th, when the price reached €5.339 per share.
The first bearish wave of Minuette degree identified in blue found support at €4.14 a share, from where BBVA bounced until the 23.6% of Fibonacci retracement of the first wave. The length of the upward retracement leads us to observe the strength of the potential next bearish move. After the wave (ii) completion, BBVA experienced a massive sell-off corresponding to wave (iii) in blue, this drop dragged the price until €2.69 per share on March 16th, when the Spanish bank found fresh buyers raising the price until €3.45 ending its wave (iv). Once the fourth wave of Minuette degree in blue had been completed, BBVA began to progress in a structural series that looks like an ending diagonal pattern.
According to the Elliott wave theory, the ending diagonal pattern is an impulsive formation subdivided into five overlapped segments. The pattern tends to appear in waves 5 and C. Its appearance reveals the exhaustion of the prevailing trend and the possibility of an imminent correction. In the previous chart, we observe that BBVA advances on its fifth wave of Subminuette degree, which is labeled in green, at the same time, this segment belongs to wave (v) of Minuette degree identified in blue. On the other hand, the RSI oscillator shows a triangle formation, that coincides with the ending diagonal pattern in progress. The current context observed in the RSI, reveals that the bias remains on the bearish side.
In conclusion, considering that BBVA moves in the fifth wave of the ending diagonal pattern, our preferred positioning remains neutral, expecting the potential indication of a reversal move. The next resistance level is located at €2.82 per share.