BMW stock began its uptrend from 15.77 euro per share in October 2008. On July 14th 2014 prices reached as high as 96.05, but BMW was unable to keep that bullish momentum and is currently trading around 83. In order to decide if the uptrend is likely to resume, we will apply the Elliott Wave Principle to the weekly chart of BMW, because, in our opinion, the Market tells us all we need to know through its past behavior.
According to the theory, every impulse-correction cycle is followed by another impulse in the direction of the first one. On the chart above you can see a five-wave impulsive sequence for wave (1/A) and a three-wave corrective decline for wave (2/B). This means that the rest of the rally is supposed to be wave (3/C), which should also consist of five waves. This condition is not fulfilled yet, which means that there is still some potential left in this uptrend. This is the reason why we think that the pull-back from 96.05 to 80.69 is just a fourth wave retracement of a larger five-wave rise. In order to be one, it has to have the necessary three waves. Let’s take a look at a 4-hour chart.
And the chart depicts a perfect 5-3-5 A-B-C zig-zag correction. Having these two charts in mind, we expect the bulls to return soon and probably take BMW above the 100 euro mark.
