Boohoo (LON: BOO) share price is hanging by a thread after a major rally this year. The shares of the online fashion retailer have dropped below the key psychological level of 50p. However, our analysis reveals that there is still time for the bulls to step in and save the day.
On Thursday, UK shares continued their sideways price action as the FTSE 100 index kept consolidating around 7,740 points level. The benchmark index is more than 1.5% down for the week, which has made investors take a cautious approach. Boohoo shares lost 1.79% during today’s trading session.
The stock of Boohoo Uk has been in a downtrend for the past few weeks. This week’s 2.53% decline makes it the 5th red week in a row. There are technical and fundamental reasons behind this drop. UK inflation remains the highest among the Western European countries. Due to these reasons, investors expect the BOE to remain hawkish in the coming months. This could be one of the reasons behind the slump in Boohoo share price.
Boohoo’s financial reports for the six months ending in February 2023 will be released on 16th May. According to the most recent Boohoo news, the fashion retailer is under fire for giving fake discounts on PrettyLittle Thing and Nasty Gal sites. The company has agreed to settle the class action lawsuit against it by paying $197 million.
A basic technical analysis of the LON: BOO chart shows that the stock may have a strong bounce from its current level. There are multiple confluences that point towards this outlook. Actually, the price is retesting its 200-day moving average, which acts as a major support. Furthermore, the March 2023 lows also lie in the same region, which makes this support even stronger.
Therefore, considering the overall bullish market structure, my Boohoo share price forecast will remain bullish as long as the price doesn’t close a week below 47.49p. A breakdown of this level may result in a major pullback to 40p.
I’ll keep sharing my updated price outlook on Boohoo & other stocks in my free Telegram group, which you’re welcome to join.
This post was last modified on May 04, 2023, 11:33 BST 11:33