Ocado Share Price Analysis Amid Rising Inflation Rates

Summary:

Ocado's share price started strongly in the first hour of the trading session. The bearish trend is likely to continue throughout the session.

Ocado’s share price started strongly in the first hour of the trading session. However, the current intra-day trading has resulted in share prices dropping and trading below the opening price. Although we are still early in the early hours of the trading session, the current drop after piercing the 956p supply level and failing to proceed with the upward move may be an indication that prices will continue falling throughout the session.

Looking at Ocado’s share price performance for the past week, the company has been aggressively bullish, and before today’s drop, it was on a 7 trading session streak of upward moves.

However, the recent bullish streak does not tell the whole story of what has been happening with the company. Late last month, Ocado released its half-year financial results, which showed that the company had lost a staggering £211million. The drop was a surge from the £27.9m loss it had made during the same period last year.

According to reports, the company blamed the current 9.4 inflation rate for its woes. They indicated that consumers were cutting their purchases and switching to cheaper options due to the tough cost of living. According to the financial report, their retail sales fell by 8 per cent to £27.9m in the first 6 months of the year. The report also showed that part of this trend was due to changing customer behaviour and buying patterns, which was mostly due to inflation.

Despite being on a streak for the previous 7 days, the current market conditions indicate the company will likely continue facing the same problem that resulted in a £211million loss. Therefore, my long-term Ocado share price forecast is a continued drop. There is a high likelihood that we will see the prices fall below the 696 price level.

However, should the price trade above the 960p price level, then my analysis will be invalidated. At that point, it will be evident that the bulls have won.