Can Tesco shares break out of the doldrums?
30th June 2022 07:58
by Alistair Strang from Trends and Targets
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After dropping around 15% from their January peak, Tesco shares have recovered some ground in recent sessions. Independent technical analyst Alistair Strang looks for clues that it can continue.
A weekly yacht race takes place across the sea loch, here in our bit of Argyll. Some weeks (vanishingly few), the ‘race’ can prove less than interesting to watch, the die-hards refusing to concede an utter lack of wind and instead, being carried in whatever direction the tide is running. We fear Tesco (LSE:TSCO) share price faces a similar future as currently there’s very little wind filling its sails.
At present, trading around 258p, Tesco's share price needs to move above 264p to give hope of some gains, as we can calculate the potential of this triggering an initial visit to 271p, with secondary, if exceeded, working out at 279p.
A glance at the chart below makes our lack of enthusiasm pretty simple to explain. Neither target price appears capable of creating any sort of high, above the market peaks of 2022. Instead, a picture forms of a share trapped in the doldrums until a creative change comes along to force movement of strength.
Should this vision of real life prove correct, there’s a serious risk of the “if it ain’t goin’ up, it’s goin’ down” theory kicking in.
Tesco need only trade below 249p to enter the early stages of significant discounting on their share price, as we can calculate the risk of this triggering reversal to an initial 227p.
Past performance is not a guide to future performance.
On the chart, such a target even makes some sense, matching the uptrend since 2016. A reversal such as this is liable to prove significant, due to weakness below 227p calculating with the potential of ongoing reversal to 204p, placing the share price in a region where a long term reversal cycle to 157p becomes possible.
However, the visuals on the chart tend suggest a bounce should 204p make an appearance.
Similar to our weekly yacht race, perhaps Tesco are not worth watching closely but perhaps worthy of an occasional glance, just in case something happens and some of our parameters trigger.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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