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Tesco Share Price Retests 200 MA As Grocery Inflation Eases

Tesco (LON: TSCO) share price opened the day at 249.6p and increased by 0.81%. On Tuesday, the share price for the UK largest retailer broke below 200 MA. The shares are now trying to reclaim the key moving average after the breakdown. The next few days will be very critical for the stock.

In June, Tesco decided to cut prices on grocery items as it claimed that grocery inflation had peaked. Since then, the share price for the retail giant has been having a pullback, correcting more than 6%.

UK Grocery Inflation Falls

The research company Kantar calculated the UK grocery inflation to be 12.7%, which is less than last month’s 14.9%. The rainy weather is being cited as one of the reasons for the decline in demand. Ultimately, the decrease in demand for grocery items may impact Tesco share price in the form of decreased sales.

In other news, Tesco also announced its new product line that will be offered in its express stores. The British retailer claimed that these products will be around 40% cheaper when compared to the branded substitutes. The product line will include 50 everyday used products and will hit the shelves in 2 weeks’ time.

Tesco Share Price Hits My 250p Price Target

In my previous forecast for LON: TSCO, I mentioned a strong likelihood of UK Retailer’s share price hitting 250p, and I was correct. The share price fell to 246.4 on Tuesday, breaking below the 200-day moving average. However, my Tesco share price forecast is still not bearish.

The indicators, RSI and MFI, are showing a bullish divergence which is often a strong indicator of a rebound in the price. If this plays out, the first bullish target will be the key resistance level of 272p. In the event that the price fails to break above the 200 MA, a bearish target of 242p, which is a key support level, will be on the cards.

In the meantime, I’ll keep sharing updated Tesco stock price forecasts and my personal trades on my Twitter, where you are welcome to follow me.

Tesco share price chart