This week we return to one of the column’s few favoured technical indicators, the Relative Strength Index (RSI). This is a classic overbought/oversold tool which can be used to help figure out when a move in one particular direction has gone too far. It has thrown up a couple of interesting high street names: one from the FTSE 100 and the other from the FTSE 250.

Tesco (TSCO)

Buy 170p

Target 240p

Stop Loss 150p

The woes of Tesco over the past 18 months have been well documented: an accounting scandal; various profit warnings; lots of changes to top management. The company still gets the largest chunk of our grocery spending with a 28% UK market share. Yet the business has not been an easy ride for investors. By April this year the price had rallied by 50% off its December 2014 lows, but most of those gains have since been lost and the shares are back to where they were a year ago.

(Click on chart to enlarge)

This presents an idea for chartist fans. The 160p/180p zone was very tempting to investors at the end of 2014; sentiment switched and the buyers returned. Weakness in the second half of 2015 has put Tesco back into this area once more and the past couple of weeks have seen the RSI move into, then out of, the oversold zone. This suggests a short term bottom at the very least. With a clear level to set the stop loss - below last year’s lows - current levels are attractive for investors who think that Tesco is not quite past its sell-by date.

Thomas Cook (TCG)

Buy 115p

Target 160p

Stop Loss 95p

With the terrible atrocities in Tunisia, Egypt and Paris this year, the tourism industry could look very different in the medium term. Last week saw travel business Thomas Cook report its first profit in five years after narrowly avoiding going out of business following the financial crisis. This was well-received by investors and seems to fit the narrative of further recovery for the business.

(Click on chart to enlarge)

As with Tesco, there has been a big level of support from last year that appears to be holding again in 2015. This is around the 100p zone and does suggest that the market sees the shares as relatively cheap at these levels, with the price recovering away from dips to this area. If we are going to see history repeat itself on the share price chart then a run back to May highs around 160p would be the longer-term objective. The latest move towards 100p saw the RSI go oversold for some time, again adding weight to this as an important support level.