- Summary:
- Boohoo share price has been signaling a return to the upside in recent days, but here's why it will struggle to maintain the momentum.
Boohoo share price opened lower on Tuesday, declining by 0.27 percent to trade at GBX 29.62. Nonetheless, the stock remains on an ascending trajectory after an upside breakout from the near year-to-date lows it sank to last week. Boohoo (LON: BOO) has built an underlying upward momentum recently, and has gained 6.2 percent in the last five trading sessions.
Good news has evaded the fashion retailer for a long while, but last week’s news of increased investment by Frasers Group was a good sign. Mike Ashley’s Frasers Group upped its stake in the company by 1.17 percent to 26.19 percent last week, helping alleviate investors’ worries as the share price hovered near YTD lows. The Boohoo share price has risen by 11 percent since that announcement.
That said, Boohoo share price has been on a steep decline in 2024, with YTD losses amounting to 24.8 percent. In addition, it has gone down by 89 percent from its position five years ago. This is a double-edged sword, as it signals a bearish sentiment, but also presents a good entry point to buy cheap.
The biggest hurdle ahead will be the quarterly earnings set for release in about a fortnight. After cutting more than1000 jobs last quarter, investors will be hoping for an improvement from the £160 million loss recorded in the last earnings report released in May.
Boohoo share price prediction
The momentum on Boohooo share price favour the upside momentum, with the price above the middle Bollinger Band, as seen on the 4-hour chart. Also, the Relative Strength Index (RSI) reading is at 58, adding support to the upside view.
Meanwhile, the 30-minute chart calls for the upside if the price goes above the pivot point at GBX 30.00. That will likely see the first resistance come at GBX 30.56. However, a stronger upward momentum could enable a break above that mark to test GBX 31.00.
On the other hand, a move below GBX 30.00 will signal the onset of bearish control, with initial support likely to be at GBX 29.60. Extended control by the sellers will strengthen the downward momentum to break below that mark and invalidate the upside narrative. Also, it could lead to further losses to test GBX 29.10.
