Ocado had been a long-term trading partner of Waitrose. However, this relationship came to an end in late 2020. Waitrose joined forces with Deliveroo, and Ocado struck an alliance with M&S.
Therefore, the Ocado share price pays close attention to the fortunes of its biggest trading partner.
Last week’s M&S earnings showed the high street giant had reported a full-year loss of £201 million. The retailer also revealed plans to shrink its footprint, closing 70 stores over the next 10 years.
OCDO lost over -4% and finished the week at 1,889.0p.
A Change In Fortunes
Ocado has been a beneficiary of the U.K’s covid lockdowns. Food delivery services saw a huge rise in business during the darkest days of the pandemic. This helped the Ocado share price achieve its all-time high of 2,914.0p in September 2020.
The gradual re-opening of the U.K economy is now starting to weigh on OCDO. After spending more than a year under restrictions consumers will be keen to return to their old habits.
Ocado Price Outlook
The weekly chart clearly shows a double top pattern, linking September’s high with a second peak in February.
The reversal of this second rally created a bearish formation. The price is now -35% lower from this peak and potentially may go lower still.
We can also see a wide horizontal area of support between 1,860p and 2,030.0p. A close below this channel would no doubt trigger more losses.
On a long-term basis, the price may find some initial support at the March 1,559.0p high. However, the real danger is a steeper decline to June 2019, high at 1,420.0p.
A close above 2,030.0p sets the Ocado share price up for a rally to the April high at 2255.0p, canceling the negative outlook.