The Ocado and Royal Mail share prices have struggled recently as concerns about falling demand as the UK reopens. Ocado shares have dropped by more than 30% in the past six months. Royal Mail has risen by just 4% in the same period.
Royal Mail and Ocado were among the biggest beneficiaries of the Covid pandemic. As the UK government locked down the country, more people shifted to online shopping.
This benefited a company like Ocado, which is one of the biggest e-commerce players in the UK. Indeed, the company’s revenue surged from more than 1.76 billion pounds in 2019 to more than 2.33 billion pounds in 2020.
As a result, the Ocado share price soared to an all-time high of 2,900p in September and then retested it in January this year. The stock has given up these gains since then and is about 38% below the highest point this year.
Meanwhile, the Royal Mail share price spiked to an all-time high of 612p in 2021. This was more than 412% above the lowest level in 2020. Today the shares are about 17% below the highest point this year. It also managed to move into the FTSE 100 index.
This price action is mostly because of the lingering fear about the two companies growth as the economy reopens. Investors believe that they will face some challenges as people shift to buying in stores.
The daily chart shows that the RMG share price has been in a strong bullish trend in the past few months. Recently, however, the stock has made a pullback as fears of slow growth have remained. Along the way, the 50-day and 25-day moving averages have made a bearish crossover pattern while the RSI has maintained its bearish trend.
While the overall outlook of the stock is bearish, the ongoing weakness seems like a falling wedge pattern. Therefore, a bullish breakout can’t be ruled out in the next few weeks.
The daily chart shows that the Ocado stock has been in a sharp downward trend. Along the way, the shares have moved below the 50% Fibonacci retracement level. It has also moved below the key support level at 1,827p.
Also, it has dropped below the 100-day and 50-day moving averages. A closer look shows that the shares have formed a head and shoulders pattern. This puts it at risk of dropping to about 1,500p in the next few months. This view will be invalidated if it rises above 2,000p.