The Sainsbury share price upward momentum accelerated as investors reflected on the relatively mild UK consumer inflation data. The stock rose to a high of 307p, which was the highest level since 2018. It has risen by more than 70% from its lowest level this year.
What happened? Sainsbury is the second-biggest supermarket chain in the UK after Tesco. The firm has a market capitalization of more than 6.9 billion pounds. The stock has been in a strong bullish trend in the past few months as retail spending rose.
It has also risen as investors predict that it could become an acquisition play. This is after an American company expressed interest in acquiring Morrison’s, the fourth-biggest supermarket chain in the US. At the same time, Asda, the third-biggest supermarket chain in the UK was also acquired.
Therefore, with the ongoing wave of mergers and acquisitions, analysts believe that the company could also come in play. This is because it has a stronger growth rate than other retailers and that it is not as expensive.
The Sainsbury share price is today reacting to the latest US inflation data. The numbers showed that the headline CPI rose by 2.0% in July after rising by 2.5% in the previous month. Core CPI, which excludes the volatile food and energy products, declined from 2.3% in June to 1.9% in July.
Sainsbury share price forecast
The weekly chart shows that the SBRY share price has been in a strong upward trend in the past few weeks. Along the way, the shares moved above the 61.8% Fibonacci retracement level. It has also risen above the short and longer-term moving averages. The Relative Strength Index (RSI) has also been rising.
Meanwhile, the stock is forming what looks like a cup and handle pattern. Therefore, the shares will likely maintain its bullish trend as investors target the key resistance at 342p, which was its highest level in 2018. On the flip side, a move below the 50% retracement at 257p will invalidate this view.