Aviva Share Price Analysis: Are We Yet in a Bear Market?

Summary:
• A week ago, the Aviva share price looked aggressively bullish and was on a more than a week-long bullish streak.

A week ago, the Aviva share price looked aggressively bullish and was on a more than a week-long bullish streak. However, on July 14, the prices dropped by 4 per cent, and since then, Aviva has not recovered. Today, it is already down by a percentage point and looking likely to continue dropping until it wipes out yesterday’s session gains. 

Part of the reason we have seen Aviva’s share price continuing to fall is the recent economic data showing the rising cost of living and an inflation rate which stands at 9.4 per cent. In most cases, a rising inflation rate increases the base lending rate to help control the inflation rate, and in the case of Aviva, this may impact its operations in a number of ways, including adding costs to their insurance products, which may be negative for both its clients and shareholders. 

The company is also in one of the toughest industries at a time when all companies dealing with financial products are under pressure. Investors may be looking at the current valuation of the company and wondering whether it is overvalued, and hence has space to continue falling. The fear of a looming recession for a firm that deals with financial products such as insurance also means investors are fearful, and the markets may be reacting to their sentiments, causing the current drop in price. 

Despite all this, Aviva may still be productive due to its dividend yield, which is forecasted to stand at 7.7 per cent for the current year. In such a case, investors are looking at the current market slump as a short-term correction, and with an attractive dividend, they are willing to wait until the storm calms. 

Aviva Share Price

Having considered all the factors listed above, my Aviva share price prediction expects the prices to continue falling. Although in recent weeks the prices have not traded below the 383 demand level, my analysis expects the current bear push to hit the level and break it. 

Therefore, expect the long-term Aviva share price to trade at almost 350p in the next few trading sessions. Looking at recent economic data, the current bear move may be the start of a long-term downward trend. However, prices moving above the 420p price level will invalidate my bearish analysis and indicate a possible push to the upside.

Aviva Daily Chart