The Diageo share price has rallied in the past few days as investors price-in more demand as the vaccination process continues. The DGE share price is trading at 2,977p in London, which is 6% above the February low of 2,813p.
What happened: Diageo was affected significantly by the coronavirus pandemic since bars and most restaurants were considered non-essential in most countries. However, the company’s share price has been relatively resilient.
It has jumped by more than 45% from its lowest level in March last year. The recent price action is mostly because most of its key markets like the UK and the US have made strong progress on vaccinations. This means that demand for wines, beers, and spirits is likely to rise in the near term.
Today, the Diageo share price is reacting to news that the company acquired Far West Spirits, a Texas-based company that produces hard seltzer. The company is known for its Original, Spicy, and Rio Red Grapefruit drinks. The company hopes that this deal will help it gain market share in the fast-growing seltzer industry.
Diageo share price forecast
The daily chart shows that the Diageo share price has been rallying recently. It has climbed to 2,977p from last month’s low of 2,813p. The price has also moved back to the horizontal channel that is shown in red. Notably, it has also moved above the 25-period and 50-period exponential moving averages (EMA) and is still slightly below the 78.6% retracement level.
Therefore, in my view, the shares will likely continue rising as bulls target the upper side of the channel at 3,084p. However, a decline below 2,813p will invalidate this trend.
DGE shares chart