Social distancing measures in response to the coronavirus pandemic forced the global economy to grind to a halt. Among the many sectors that are now suffering, travel was probably hit the hardest. The market quickly reflected the new reality, punishing airline, restaurant and retail stocks. Booking Holdings, the leading player in the online travel industry, dived too.
BKNG fell to $1107 a share on March 23rd, but in reality, the stock has been trending lower for over two years. And while the industry won’t return to business as usual for a while, Booking remains a high-quality company. People will travel again one day and the current selloff is a great buying opportunity. So let’s see what is left of it on the Elliott Wave chart below.
Booking was clearly in an uptrend prior to March 2018 when it hit a record high of $2228. Therefore, the following weakness must be some kind of a three-wave retracement. Judging from the chart above, it is a regular A-B-C flat correction.
Wave A is a (w)-(x)-(y) double zigzag, while wave B is a simple (a)-(b)-(c) zigzag. Wave (c) of B is an expanding ending diagonal. It follows that the COVID-19 selloff must be a five-wave impulse in wave C. So far, we can see waves 1, 2, 3 and 4, which means wave 5 remains.
Wave 4 reached the 38.2% Fibonacci level yesterday, where fourth waves usually terminate. If this count is correct, the bears should be able to drag Booking stock to roughly $1000 a share in wave 5 of C. A major bullish reversal should then be expected in that area.
It will take some time for Booking and the travel industry as a whole to recover. However, long-term investors should take advantage near the point of maximum pessimism. Waiting for things to improve first would inevitably mean paying a higher price.
Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!