Boohoo (LON: BOO) share price has behaved exactly as predicted in my previous forecast. In that analysis, I gave a 47.8p price target for the shares of Boohoo UK, and the price has already hit 49p. This has been more than a 10% drop which is not surprising if you know the basics of technical analysis.
My recent analysis shows that Boohoo shares are due for another rebound if the market conditions remain favorable. On Thursday, UK shares depicted a mixed price action as the FTSE 100 index turned negative for the second consecutive day.
The latest data revealed that UK inflation increased by 10.1% during March 2023. While this was a decrease from February inflation of 10.4%, it was still less than the market expectations of 9.8%. The inflation data dragged the shares of most UK retailers lower on Wednesday.
After the latest inflation report, the UK now has the highest inflation in Western Europe. The sticky double-digit inflation will keep the Boohoo share price in check in the coming months. This is because the Bank of England may adopt an even more hawkish approach to tame inflation.
A basic technical analysis of the LON: BOO chart reveals that the ongoing negative price action isn’t surprising at all. As evident from the following chart, there was a huge resistance at the 55p-56p region. The confluence of this resistance with the downward trendline created a major supply zone just above 55p which resulted in a sell-off.
Currently, Boohoo share price is retesting its 200-day moving average, which may result in a bounce in the coming days. In case of a breakdown below 47.8p, Boohoo share price forecast will flip bearish. This can tank the price to 40p, where lies the next support level.
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 %s = human-readable time difference 12:05