The Ocado share price has been in a tight range in the past few days as investors reflect on the company’s growth after the UK reopens. The stock is trading at 1,980p a day ahead of the corporate earnings by Marks & Spencer, its strategic retail partner.
Ocado news: Ocado shares have fallen by more than 30% from its year-to-date high. This is in line with how other companies that benefited from the coronavirus pandemic have performed. For example, in the United States, companies like AMD, Shopify, and Zoom Communications have lagged the overall market. This is simply because investors expect that these firms will see slow growth as the economy reopens. Instead, investors have moved to reopening stocks like banks and energy.
This week, the Ocado share price will react to the earnings by Marks and Spencer. Analysts expect that the company will report relatively faster growth in the final quarter of its year. This is after it reported its first loss in its 94-year history. It made a loss of more than 71.6 million pounds after its revenue declined by 15.6% in the first six months of the year.
This performance was partially offset by a 47% growth of its grocery sales because of the deal it has with Ocado. The same trend likely continued for the final quarter since the UK was in a lockdown. The company will likely offer a better forecast as the economy reopens. So, what next for the Ocado share price?
Ocado share price forecast
The daily chart does not look good for the OCDO share price. For one, it has formed a double-top pattern at 2,910p. This is usually a bearish sign. Worse, the shares have moved below the neckline of this pattern at 2,139p. Further, it seems to be forming a bearish pennant pattern, which is usually a bearish sign.
The shares have also dropped below the 25-day and 50-day exponential moving averages (EMA). Therefore, in my view, we can’t rule out another bearish breakout to 1,725p, which is 13% below the current level. However, a move above the resistance at 2,140p will invalidate this trend.