close icon

Heineken Dips 34% as Elliott Wave Correction Begins

Alcoholic beverage companies are generally thought of as safe investments as consumption tends to remain stable even during difficult economic times. This is even more true when it comes to beer brewers, and especially so when speaking about Heineken – the largest brewer in Europe.

But the COVID-19 brought an economic crisis unlike any other. People started stockpiling necessities and beer didn’t make the cut. On April 8th, Heineken withdrew its 2020 financial guidance due to coronavirus uncertainty. The market was obviously anticipating bad news as the stock lost 34% between February 19th and March 16th.

And while hardly anyone could’ve predicted the pandemic, Heineken stock was supposed to drop even without it. Nearly six months ago, its weekly chart revealed a troubling Elliott Wave pattern. We wrote an article about it on October 25th, 2019. Take a look.

Heineken stock vulnerable to a 30% drop

Heineken’s weekly chart allowed us to examine the structure of the entire uptrend from the bottom at €18.75 in March 2009. It looked like a complete five-wave impulse, labeled (1)-(2)-(3)-(4)-(5). The five sub-waves of wave (3) were also visible.

Elliott Wave Decline Still Unfolding in Heineken Stock

This uptrend multiplied investors’ money by more than five in ten years. Unfortunately, according to the theory, a three-wave correction should be expected. So instead of joining the bulls near €94 a share in October 2019, we thought “a three-wave decline can be expected to drag Heineken down to the support area … near €70.” The updated chart shows how the situation played out.

Heineken drops by a third as Elliott Wave correction takes place

The bulls managed to lift the price to €105, but eventually their efforts proved to be fruitless. On March 16th, Heineken dipped below €69 a share. It took less than a month for the bears to erase three years’ worth of progress.

Now, you might have noticed that the count looks a little different from the one published in late-October. That is because the chart inspires a better idea now. Wave (4) actually ended at €67.47 in November 2016. The rest of the rally looks like an ending diagonal in wave (5).

If this count is correct, last month’s crash to sub-€69 must be the first phase – wave (a) – of a larger correction. This means wave (b) up and (c) down still remain. A recovery to roughly €90 is likely to be followed by another selloff to €60 or less. In our opinion, the bears are not done with Heineken yet. Just regrouping.

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!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Electronic Arts Can Lose 50% in Elliott Wave Correction

Electronic Arts hasn’t been able to reach a new all-time high since July 2018, when it climbed to $151.26. However, the stock came close to that last month after the coronavirus panic in March was quickly forgotten. Currently near $127 a share, Electronic Arts holds a rather high valuation at 29 times its expected fiscal…

Read More »

Buffett’s DaVita Stock Looks Like a Bull Trap

Formerly known as DaVita HealthCare Partners Inc., DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease. It was founded in 1994 and went public a year later. As of this writing DaVita’s market cap is close to $10.7 billion. The interesting part is that it is…

Read More »

London Stock Exchange Stock Needs a Breather

Stock exchanges are the places where the shares of publicly traded companies change hands. But sometimes we forget that the exchanges themselves are operated by a company, as well. Usually, those companies are also public with their stocks trading on the exchange, too. That is exactly the case with the London Stock Exchange Group plc.…

Read More »

Yum! Stock to Form a Base Near $75 a Share

The coronavirus selloff hit the restaurant industry hard. With stores closing to prevent the virus from spreading, the stocks of McDonald’s, Starbucks, Dunkin and the like all came crashing down. Yum! Brands wasn’t spared either. YUM stock has been losing ground since the summer of 2019, but it was the COVID-19 crisis that really scared…

Read More »

Intel ‘s Troubles Fit in its Elliott Wave Correction

2020 is shaping up as a year to forget for Intel shareholders. The stock is down over 20% year-to-date. First, the coronavirus selloff caused a 35% plunge down to less than $44 a share. And just when it seemed INTC was recovering, the company announced it will delay its 7nm products until late 2022 or…

Read More »

Expedia Stock can Surge as Travel Returns

The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before…

Read More »

Plus500 Confirms Uptrend, but Correction is Likely

Based in Haifa, Israel, Plus500 (LSE:PLUS) operates a leading CFD trading platform. The company is part of the FTSE 250 index and conducts most of its business in Europe and Australia. The new ESMA regulations which came in effect in August 2018 severely impacted the CFD trading industry. As a result, Plus500 stock fell from…

Read More »

More analyses