On April 20, Procter & Gamble released its Q3 fiscal year earnings and told investors that the current inflationary pressure is costing the company several billion dollars this year.
Technically, Procter & Gamble's stock price has been moving in a downtrend since late April. A reversal began at the low of this trend, and later candles lined up in a Three White Soldiers pattern. Procter & Gamble's stock price is now close to the resistance trend line.
Despite the spread of inflation and supply chain problems, the company has not lowered its 2022 earnings-per-share forecast. Procter & Gamble plans to deal with the increased costs by passing them on to the consumers and has already raised prices in all of the categories. At the same time, consumers have taken the price increase calmly. The company's management notes that consumers do buy fewer units, but the drop is not that significant compared with similar periods when Procter & Gamble prices were raised..
The company's stability amid a volatile macroeconomic backdrop may be an explanation for the reversal that is occurring. Investors may be shifting their focus to consumer staple stocks, abandoning unprofitable growth stocks. Investors will be hoping for Procter & Gamble's strength ahead of the next earnings release, which is expected on July 29, 2022.
Procter & Gamble stock price may continue to strengthen all the way to the 50 Fibonacci level of 147.2 and break through the resistance level. Otherwise, it will decline towards the 138 level.