The sign is used when the Alghoul, after taking some damage, will produce large spikes from it's back. You mentioned the Axii sign, indeed the Bestiary covers this. Bear in mind you cannot apply oils when in combat, ie, Geralt has drawn a sword automatically and you can parry rather than Witcher sense. A good technique for this is to use your Witcher senses to look for movement circles (the white wobbly circles) then listen, you'll hear gutteral gurgling and growling, which to me says Necrophage. If you have the Necrophage oil, and you've spotted the Alghoul far enough away that you're not in combat, apply your oil. If you have the Fleet Footed perk and Fast Attack perks, all the better. Don't get greedy, they can hit you through your own attacks. Then you'll want to dodge to the side and get three fast strikes in.
When they flash red, that is the visual signal that they are about to attack.
Watch the monster carefully and continually circle around them. Also, you will not be able to counter so holding down the Parry button is a waste. If you roll, you'll be too far away to strike them, and parrying you'll still take damage. You'll want to dodge instead of rolling or parrying. I rely on dodging and the fast attack skills, other tactics might vary by build.
