- Summary:
- In this Ocado share price forecast, we explain why the double bottom pattern is hinting to a possible rebound in the near term
The Ocado share price is struggling. The stock ended last week at 2,022, which was slightly above the weekly low of 1,956p. Still, the stock is 30% below the year-to-date high of 2,888p.
What happened: Ocado has been one of the biggest winners of the pandemic in the FTSE 100 index. With more people staying at home, the demand for online grocery shopping rose, leading to higher revenue for the company.
Indeed, last week, the company said that its sales rose by 40% in the past three months to 599 million pounds. The average orders per week rose by 2.9% to 329,000 with the average order price rising to 147 pounds. In a note, the company’s CEO said:
“We don’t expect that we’ll go back to the way things were pre-Covid. Large numbers of customers have tried online grocery for the first time and for the most part they see its benefits and won’t be going back.”
Still, analysts are concerned about whether the company will continue to experience this growth once the pandemic ends. They are also concerned about the recent entry of Amazon’s cashier-less shops in the UK and the higher costs.
Ocado share price forecast
On the four-hour chart, we see that the OCDO share price dropped to 1,967p in early March and then bounced back to 2,220p. It also seems to have formed a double-bottom pattern, which, in technical analysis, is usually a reversal pattern. It is also below the 25-day and 50-day moving averages.
Therefore, in my view, the stock could resume the upward trend in the near term as investors rush to buy the dips. This prediction will be verified if the price manages to move above the double-bottom neckline that is at 2,222p. On the flip-side, a drop below 1,967p will invalidate this prediction.
Ocado stock chart
