While Henkel is a household name in the field of consumer goods and personal care, the company is also active in the industrial sector. Founded in 1876 and headquartered in Düsseldorf, Germany, it has a €28 billion market cap and sales of roughly €20 billion a year. It is fair to say that if stability and predictability is what you’re looking for, Henkel is a good place to start.
Judging by the stock’s 5-year returns, however, that is not what most investors have been looking for. A single share in Henkel switched hands at nearly €130 in June, 2017. Last week, it briefly dropped below the €60 mark for a 54% decline in less than five years. Should we expect the recent downtrend to continue or a bullish reversal to finally occur soon? The weekly chart below puts things into Elliott Wave perspective.
It appears Henkel ‘s underperformance over the past half a decade was the result of a three-wave correction, following a five-wave impulse. This means we’re most likely seeing a complete Elliott Wave cycle. The motive phase is labeled (1)-(2)-(3)-(4)-(5), where the five sub-waves of wave (3) are also visible. Wave (5) is an ending diagonal. The corrective phase has taken the shape of a simple (a)-(b)-(c) zigzag.
The price is now touching the 61.8% Fibonacci support level, where corrections often end. If this count is correct, we can prepare for a notable bullish reversal as soon as wave (c) is over. In the long term, the anticipated recovery should eventually be able to clear the €130 mark. The next five years are shaping up to be very different than the past five.
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!
