The Tesco share price struggled in June even as talk of merger and acquisition (M&A) continued in the UK retail sector. The stock started the month at around 225p and then it rose by 4% to a high of 233p. It is now trading at 222p, which is where it started the month.
What happened. The UK retail sector came in the spotlight in June after an American private equity company announced plans to buy Morrisons, the fourth biggest retailer in the country. While the company rejected the offer, there is a possibility that the PE firm will launch a hostile takeover bid. The report came as another secretive PE firm concluded its acquisition of Asda.
Therefore, there is talk that other UK supermarket chains could be acquired. Most analysts believe that Tesco is out of the question because of its $30 billion market capitalization. There are also concerns about whether the UK would approve a takeover of the country’s biggest supermarket chain.
The Tesco share price has also struggled because of reports that Amazon will become the biggest retailer in the UK in the next few years. Further, there are concerns that retail sales will start to decline as the UK economy reopens.
Tesco’s financial calendar is relatively muted in July. The company is set to publish the next trading statement in October this year.
Tesco share price forecast
The four-hour chart shows that the TSCO share price is trading between the 50% and 61.8% Fibonacci retracement level. The stock also seems to be forming a symmetrical triangle pattern. Most importantly, there is a bearish buildup close to the lower side of the triangle pattern.
Also, it is slightly below the 25-day and 50-day exponential moving averages (EMA) while the RSI is hovering near the oversold level. Therefore, the stock may break out lower as bears target the next key support at 200p. On the flip side, amove above the 50% retracement at 226p will invalidate this trend.
TSCO share price chart
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