GSK share price tests the resolve of a longterm uptrend

Summary:

The GSK share price requires a booster shot. Whilst rival firms reap the rewards of the Covid vaccination drive, Glaxo may soon lose major support.

The GSK share price requires a booster shot. Whilst rival firms reap the rewards of the Covid vaccination drive, Glaxo may soon lose major support.

Glaxo SmithKline Plc (GSK.L)is trading at 1,414p, down 10.4p (-0.73%).

Coming into June, the GSK share price was in the latter stages of an impressive recovery from the February 1,190.8p low. Glaxo had rallied 20% and appeared to be on track to break above a restrictive trend line at 1,450p.

However, the news that its collaboration with German Pharmaceutical giant Bayer and CureVac had failed to produce an effective Covid vaccine derailed the recovery.

A late-stage trial revealed CureVac’s CVnCOV pandemic shot was only 47% effective against Covid-19, a far cry from Pfizer-BioNTechs, Moderna’s almost 95% win rate.

As the Delta-variant strain increases global infection rates, vaccine rollout timelines are brought forward, serving as a benefit to Glaxos major rivals.

So, where does this leave the GSK share price?

Glaxo price forecast

The daily chart highlights a strong trend channel that steered the price higher from the February low. The lower end of the channel is visible at today’s 1,410p low. Furthermore, the price tested the validity of the trend on both Thursday and Friday of last week. For now, the support remains intact. However, should that change, the 50-day moving average at 1,392.6 and the April 1,389p high must do their job. A failure to maintain this level would target the 100 and 200 DMA’s at 1,342.7p and 1,355p, respectively.

Resistance is offered at the June 16th, 1,451.6p high. Only a close above this level would alleviate the downside pressure and invalidate the bearish outlook.