The stock price of The Coca-Cola Company (NYSE: KO) exposes a sideways formation that shows the Elliott wave structure of a flat pattern (3-3-5).
In its big picture, Coca-Cola shows a bearish movement that began on February 21st, when the price found sellers at $60.13 per share. KO developed a three-wave sequence that accelerated its bearish momentum in its wave ((c)) of Minute degree labeled in black. Coca-Cola, in its massive sell-off, plummeted until $36.31 when the price found fresh buyers, and at the same time, completed the wave A of Minor degree labeled in green.
Once the wave A of Minor degree finished, KO began the progress of wave B of the same degree. According to the textbook, in a corrective structure, wave B is built by three internal segments.
In the previous chart, we distinguish the first upward sequence from the March low at $36.31 per share, from where KO developed boosted in three waves. The completion of this ascending wave corresponding to wave ((a)) of Minute degree labeled in black ended at $49.73 in early April.
Currently, the price action advances in wave ((b)), which looks incomplete. The internal structural series of wave ((b)) reveals that KO is developing its wave (c) of Minuette degree identified in blue, which at the same time, runs in its internal wave iv of Subminuette degree in green. Therefore, once the fifth internal segment corresponding to wave v in green is completed, the wave ((b)) will end. It will give a pass to the upward wave ((c)), which according to the Elliott wave theory, must have five internal movements.
In consequence, considering that the first decline corresponds to a three-wave sequence, and the current structural series also follows a three-wave sequence, there exists the probability that KO advances in a corrective Elliott wave pattern identified as a flat pattern.
In this context, if Coca-Cola follows a flat pattern, this makes us consider a new low, which could re-test the March low at $36.31 per share.
On the other hand, if the price action carries the price to surpass the February high at $60.13 slightly, it could be indicative that the flat pattern will correspond to an irregular flat pattern. In this context, if this scenario occurs, probably KO will complete the bearish leg developing a failure in wave C.