Ocado share price close to major support ahead of Q1 trading statement

[MongiIG]

Ocado is looking for support above the 1,000p mark as it signs a deal with Auchan in Poland, drops “best before” labels on some UK fruit and vegetables and enters a court battle over a patent infringement dispute with Autosave.

Source: Bloomberg

 Axel Rudolph | Market Analyst, London | Publication date: Tuesday 15 March 2022 

Online grocery business, Ocado has signed an exclusive deal with Auchan to build a fulfilment centre in Poland to serve the Warsaw area by 2024 with the French supermarket giant allowed to use its technology across Auchan stores in the country, having already made a similar deal with the company’s Alcampo brand in Spain last year.

Under the terms of the deal, Ocado will be paid certain fees upfront from Auchan Poland during the construction of the Warsaw warehouse with ongoing fees after completion being linked to criteria such as sales targets.

This week Ocado also announced that it intends to axe “best before” labels on some fruit and vegetables in the UK in an effort to reduce food waste.

Meanwhile the UK-listed firm is going to the High Court in London with the Norwegian robotics firm, Autostore over a patent infringement dispute. The two innovative companies are facing off in multiple jurisdictions around the world to protect their intellectual property in warehouse storage technology. Ocado, like its competitor Autostore, licences its technology and uses it for its British grocery delivery service.

The UK grocery company scored a significant win when it won the latest round of litigation in the United States, where the International Trade Commission affirmed a December ruling that Autostore’s patent claims against Ocado were either invalid or not infringed. The Norwegian pioneering company plans to appeal the ruling in the US Court of Appeals, though.

On Thursday, Ocado will publish its first quarter (Q1) trading statement which is expected to have an impact on the company’s share price which last week managed to hold marginally above key long-term technical support, having previously slipped by over 60% from its February 2021 peak.

Source: ProRealTime

 

This major technical support zone is comprised of the November 2019, February and March 2020 lows at 1,054 to 996 pence.

Provided that it continues to underpin, a retest of the November to March downtrend line is on the cards since the current March low at 1,061 has been accompanied by positive divergence on the daily RSI.

Last week it thwarted an attempt of a rally at 1,322 pence.

Source: ProRealTime

 

The next higher early March high at 1,390 will need to be exceeded, for a bottom to be formed and for the key 1,546p to 1,626p resistance area to be reached. It contains the October, December lows and the late January-to-February highs and as such should prove to be difficult to overcome, if reached at all.

Failure at major support at 996p would engage the October 2018 low at 731p.