Aviva share price doji pattern points to a false breakout

Aviva (LON: AV) share price formed a long-legged doji pattern after climbing to a record high this week. It jumped to an all-time high of 467.2p after the company published strong financial results on Wednesday. At its peak this week, the stock was up by almost 40% from its lowest level in 2022.

Aviva business is doing well

Aviva stock price plunged hard on Friday as a somber mood engulfed the financial market in Europe, Asia, and the United States. This sell-off was triggered by the performance of the bond market, which some analysts are equating to penny stocks. The situation accelerated when Silicon Valley Bank announced a rapid cash call.

In such a situation, you would expect major financial services companies like insurance, private equity, and banks. Indeed, as I wrote earlier, Lloyds Bank and other European bank stocks plunged hard as concerns about the industry continued.

Still, results published this week showed that Aviva was doing well. The company’s operating profit jumped by 35% to 2.2 billion pounds as its baseline controllable costs declined by 3% to 2.7 billion pounds. Most importantly, its solvency II return on equity increased to 16.4%.

Aviva decided to continue its shareholder returns. It increased its buybacks to 300 million pounds. The company expects to return about 915 million pounds to investors in the form of dividends and shareholders.

These results show that Aviva’s business is improving after the company announced a radical shake-up a few years ago. It exited its underperforming markets like Italy and the United States. It shifted its focus on the UK, Ireland, and Canada. 

Aviva share price forecast

AV chart by TradingView

The daily chart shows that the AV share price has been a tight range in the past few weeks. It remained slightly below the key resistance level at 460.5p, which it failed to move above since November. The shares have now formed a long-legged doji, which is usually a bearish sign. 

Therefore, there are signs this week’s bullish breakout was a false breakout. As such, we can see the stock continue falling, with the next key level to watch being at the key support level being at 431p. This price is about 3.8% below the current level. More upside will only be confirmed if it moves above the key resistance at 467p.