Stock of the day: Sainsbury

Today, we’re analysing Sainsbury, one of the UK’s leading retailers. We’ve already analysed the situation around this instrument at the end of January. Back then, we saw an interesting bullish pattern, but at the same time, we warned you that it’s just a promising pattern, without a proper trading signal yet:

“A breakout to the upside can but does not have to happen, so do not be too optimistic yet. Waiting for a legitimate breakout is usually the best practice to apply in such situations.”

The breakout did not happen and formation failed to give us a proper signal. It’s very important to remember this and learn a lesson in patience and final confirmation. Both of those are essential in trading.

Sainsbury is still in a long-term downtrend (red). The price is successively making lower lows but this may end soon. SBRY is currently testing the downtrend line again. We have to be ready for a potential breakout. Once the breakout happens, we’ll get a proper, long-term sell signal.

As long as the price stays below, the sell signal is ON and any bearish bounce from the trendline should be treated as an invitation to go short.