Tesco share price is taking a hit this Thursday as data starts to show a slowdown in online grocery sales in the UK. UK grocery sales slowed to 18.9% in June, and 14.6% year-on-year in the period from mid-June to mid-July, as shoppers started to trickle into supermarkets and grocery stores following the easing of lockdowns in the UK.
The news comes as Tesco starts to make plans to introduce an online trial of selling Coca-Cola and ketchup to customers in refillable bottles as it aims to reduce plastic waste from its existing packaging.
The company also aims to introduce reusable packaging for Nivea moisturizers as well as Persil washing powder, partnering with waste management company TerraCycle to deliver this solution.
Technical Outlook for Tesco
Tesco share price currently stands at 218.1, representing a drop of 1.58% on the day. Tesco is currently trading within an ascending channel, with the upper border rejecting price uptick for the entire week. A pullback is now underway, and this move could aim for the lower channel border as the initial target. This border intersects the 214.0 support line (6 August 2019 and 17 March 2020 lows), which could validate this area as potential support. A breakdown of this support area brings in 211.3 (27 August 2019 low and recent lows of 9 July and 14 July 2020) as the next support target. The low of 25 March and 8 April 2020 located at 206.5 could also become relevant if the breakdown leads to an extensive decline.
On the flip side, we could see a bounce on the lower channel border, which sends Tesco share price back towards the 220.2 resistance line (neckline of triple top of August 2019 and 8/24 July 2020 highs). Only a break of this line would allow price to attain the channel’s return line. Attainment of the 228.0 resistance target requires a breakout of Tesco share price above the channel, with 234.3 and 239.7 remaining distant targets to the upside.
Tesco reports its next quarterly earnings next week.