Ocado share price has spiked this Monday following initiation of a new national lockdown in the UK. Ocado has also raised its full-year earnings guidance for 2020 from 40 million pounds to more than 60 million pounds after tax.
Ocado has indicated that its new joint venture with Marks & Spencer remains strong and products sold under this joint venture continue to attract high demand. Ocado attributes this demand to the changes in consumer behaviour brought on by the coronavirus pandemic, which has led to a mass migration to online grocery shopping in record numbers.
The one-month lockdown means that Ocado is likely to see even more demand for products on its online shopping facilities, heading into the holiday shopping season. Ocado currently trades at 2501 after recording a near 10% rise on Monday.
Ocado’s recent price action formed a potential double bottom, with the troughs resting at the 2247 support level. Today’s spike clears the neckline to the upside, thus confirming the pattern and opening the door towards the 2440 resistance level. This resistance has been violated by today’s candle.
If the candle closes at or above current levels, this fulfils the 3% upside penetration close that confirms the price filter breakout. This allows 2582 to serve as the next resistance, with 2741 lying ahead as a potential future target.
On the flip side, a pullback to close today’s gap needs to break below 2440, with the neckline at 2360 forming the next downside target. A breakdown of this neckline allows 2247 to come into focus once more. A bounce on 2247 transforms the pattern into a potential triple bottom, while a downward push invalidates the upward push from the pattern sequence and brings in 2180 into focus as an additional downside target.
