In case you are wondering what to invest in for the long term, Adidas does not look like a good choice, at least not right now. It is always better to buy after a significant decline. Currently above 60, Adidas AG’s share price fell from 93 euro in the beginning of the year to below 53 in the middle of October. A 40-euro sell-off can easily be called significant. The question is whether it is over or not. The daily chart below could be able to provide us with the answer.
According to the Elliott Wave Principle, the direction of the current trend is designated by five-wave sequences, called impulses. As visible, the 40-figure slump can be counted as one such impulse. The theory also states, that every impulse is followed by a correction in the opposite direction. In our opinion, the recent recovery from 53 to 60 is the first part of this correction. We expect the retracement to extend, because there is a gap in the middle of wave (3) and gaps are usually filled up. After that, Adidas should once again head to the south. If this is the correct count, investors should wait for another five-wave decline in the face of wave C.
