The Boohoo share price has started Tuesday’s trading session on a negative note, pushing lower by 1.54% as investors continue to view the stock negatively. Monday’s trading session had seen the Boohoo share price trade as low as 36.38p before the bulls staged a comeback to pare most of those losses.
The negative sentiment around the Boohoo share price has continued after it emerged that the company and Wilko had cancelled several orders with suppliers amid slow sales. The cost of living crisis in the UK, shipment delays and the impact of store closures during Queen Elizabeth’s burial ceremony are reasons for the slump in sales.
Stratospheric inflation on both consumer and producer ends is impacting Boohoo. On the producer end of the supply chain, the cost of raw materials and rising energy costs strain the company’s bottom lines.
On the consumer end, shoppers are changing their habits to accommodate only the most essential items on their family budgets. The company is set to release its interim quarterly results on Wednesday, which could have a material impact on the direction of the Boohoo share price.
The daily chart reveals an emerging falling wedge pattern, which has bullish implications for price action. This is especially important as the price has trended downwards for several weeks and is potentially due for an upside correction.
This correction would require a bounce on the 39.12 support (1 September low), targeting a move toward 45.18 (30 March 2016 and 13 September 2022 highs). If the bulls uncap this barrier, they will have clear skies to aim for the 52.30 resistance (30 June low). Additional upside targets come in at the 59.32 resistance (3/10 August lows) and 63.43 (16 August high).
This outlook is negated if the bears succeed in degrading the 39.12 support level. This move opens the door toward the 32.83 support (17 December 2015 low) and the 27.28 pivot formed by the previous low of 30 April 2015 and 24 August 2015. An additional target to the south is found at 23.01, the site of the 26 May 2015 low .
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