Almost two months ago, on March 15th, we published an article, called “Peugeot SA could lose one third”.
Reading: Peugeot SA could lose one third
In that material we stated, that although Peugeot 308 had just been crowned “Car of 2014”, we expect a significant decline in the company’s stock prices.
This chart represents the situation as it was two months ago. Using the Elliott Wave Principle, we were able to analyse past price action and form an opinion of what the future is most likely to bring. Since we had a completed five-wave impulsive rally, we were preparing for a reversal to the downside. On the next chart you can see if we were right.
As the chart shows, the only thing we could not predict was the speed, with which Peugeot SA’s stock crashed from 14.55 to 9.05. This is a good example of how the Wave Principle can serve as a forecasting tool, which prevents us from being over-optimistic at tops. Despite having reached our target, the down move may still be in progress. The best strategy here is to wait.
