Sales figures today confirmed that the recovery is very much on for Tesco Plc (LON:TSCO), but those with a chartist’s intuition may have seen the good news coming.
Technical analyst Zak Mir, in a Tips TV segment for Proactive Investors, says the Tesco chart turned positive some time ago.
Mir, aka the King of Charts Zak, told traders to watch out for what chartists call a ‘golden cross’ buy signal – when the line of the 50-day moving average crosses above the 200-day line – and he set a 230p target for the FTSE 100 supermarket share.
WATCH: Zak’s analysis right now
Mir highlighted that momentum is with Tesco and with all the bad news seemingly out the bears now have little to cling to.
“We were very much looking at the recovery [in the share price] even before the news came out today,” Mir says.
“We’ve broken the 200-day moving average, with higher lows above it at the end of last month.
“In fact if you look at the 50-day and 200-day moving average they are both rising, that means there’s probably going to be a golden cross buying signal over the next week or two.”
He added: “Traditionally, the run up to a golden cross is the strongest part in the cycle. So we’ve had a lift up to that, and the target here on a technical basis is the top of the range channel at 230p over the next one to two months.
“That target will be valid while we hold above say 185p to 190p.”
From a technical point of view any dip in the share price that falls short of these support levels should be seen as an opportunity to buy, he added.