Tesco stock: bearish signals and resistance cap price near £438

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Tesco slides 0.48% to GBX 438.40

Highlights

Tesco advanced its £1.45 billion share buyback program by acquiring over 2.13 million ordinary shares, signaling commitment to capital returns.
Annual sales for fiscal 2024/25 increased 3.5% to GBX 63.6bn, while earnings per share climbed 17% to 27.38p, reflecting robust underlying performance.
Improved profitability led Tesco to raise its final dividend by 13.2% to 13.7p and its interim dividend by 12.9%, supported by growth in sales and free cash flow.

Dividend growth and EPS jump as buybacks and cash flow drive returns

Tesco has made progress in its £1.45 billion share buyback program, purchasing over 2.13 million ordinary shares. The company reported strong results, with annual sales for fiscal 2024/25 rising 3.5% to GBX 63.6bn and a 17% increase in earnings per share to 27.38p. Profitability also improved, driving a 13.2% rise in the final dividend to 13.7p and a 12.9% increase in the interim dividend following growth in sales and free cash flow.

Oversold momentum and dominant sellers as weak trend persists

Momentum signals remain broadly negative on the daily chart: MACD points to a sell signal and ADX is low at 14.13, indicating a weak trend. Daily RSI (41.98), CCI (–129.57), and Stoch RSI (8.32) all signal oversold conditions, and Bull/Bear Power is deeply negative (–4.88), showing sellers are dominant intraday. Awesome Oscillator also supports the current downside move. The Ichimoku Kijun line at GBX 457.20 acts as the nearest dynamic resistance, with the MA-200 supporting the lower boundary.

Sideways consolidation likely as bullish weekly signals raise upside odds

Looking ahead, the expected five-day price range is GBX 428 to GBX 445, which fits within a typical weekly fluctuation from the current price. The probability of an upward move is more likely (80%), given strong bullish signals across weekly MACD, ADX, RSI, and moving averages, while a decline is less likely. The baseline scenario calls for sideways consolidation between support at GBX 428 and resistance at GBX 445. A bullish breakout would require a sustained move above the Ichimoku resistance, while a bearish scenario would see the price falling below GBX 428, targeting broader weekly support near MA-200 levels.

Viktoras Karapetjanc, expert at Traders Union, sees a constructive setup for Tesco PLC. He believes the company’s strong fundamentals and positive earnings momentum support a bullish outlook, despite recent technical softness. Macro and sentiment drivers appear favorable, with the share buyback program and earnings boost likely underpinning investor confidence. Consolidation between GBX 428 and GBX 445 is likely, but a breakout above resistance could trigger a new advance. "As long as Tesco holds above GBX 428, I remain confident in the medium-term upside potential."

Previously it was reported that Tesco shares are trading below their short- and medium-term moving averages, reflecting ongoing bearish momentum despite holding above long-term support. Momentum indicators remain weak with oversold oscillators and persistent selling pressure, while key resistance is identified near the Kijun level and support is anchored at the MA-200.

Source of Data: TSCO Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.