Aviva (LON: AV) share price appears to be retesting the trending line after a breakout two weeks ago. The share price surged to 404p earlier this month, achieving a new high since 12th June. However, it had a 2.42% pullback in the following week and is now trading at 384p.
FTSE 100 has been gaining strength for the past few weeks. It is interesting to note that the share price for Aviva slid despite FTSE 100 standing above 7,700 points. On Tuesday, Avivia shares are trading at 385.3p after declining by 0.80%.
New IAS Might Cause Uncertainty For Aviva
The British Insurer is expected to provide its earnings report on 16th August for the second Quarter. The new standard, IAS 17, will be followed, which requires the revenue to be recognized sooner than before. This can lead to a lower profit in the short term for Aviva.
Several Analysts suggest that reappraisal of Aviva’s earning power might prove to be challenging for investors due to a short-term decline in profits. This is one of the primary reasons behind a pullback in Aviva share price, which had just started to show some strength. The negative price action comes at a time when UK equities are facing tailwinds due to decreasing inflation in the country.
Aviva Share Price Fails To Breakout
In my previous forecast, I expected a bounce from the 385.5p level. This bounce occurred, and the shares surged toward 404. However, the stock failed to gain strength above 404p and is now trading once again below the trendline.
Avica share price forecast will flip bullish only if the stock gains strength above the downward trendline shown in the following chart. In case of a breakout, the first target for the bulls will be a retest of the 423p level, where lies the 200-day moving average.
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