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Boohoo Shares Just Bounced Off Crucial Support – Is It A Buy?

Simon Mugo trader
Updated 30 Nov 2022

The Boohoo Group PLC (LON: BOO) share price was trading up 4.68% today after bouncing off a critical support level last week. The move has left many investors wondering whether now is a good time to buy BOO shares.

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YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


From Boohoo’s daily price chart below, the recent bounce off the long-term 35p support level is critical, given that BOO shares traded sideways at the same level for most of October before rallying higher.

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YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY

Therefore, from a technical analysis perspective, the bounce is significant since a support or resistance zone tends to get stronger every time it is tested. Hence, we could get a rally from this level as we head into December and the new year. 

From a fundamental perspective, Boohoo continues to make the right decisions that can guarantee its future business growth. The fast-fashion retailer recently increased its stake in Resolution Beauty. The company upped its stake in Resolution Beauty from 12.9% to 26.47%. 

Boohoo’s increased shareholding in Resolution Beauty comes at a time when the company just named Bob Holt, as its new CEO, following the October departure of its founder Adam Minto, after delays in completing the audited accounts.   

The fashion retailer is currently building a massive warehouse and distribution centre in the US that will reduce delivery times for its US clients from the current ten days to a maximum of three days since US orders will be fulfilled domestically. 

Boohoo noted in its last financial report that its potential customers globally could exceed 500 million people, which means that the company has significant growth potential given that its current customer base is 19 million. 

Despite the challenging operating environment that saw Boohoo report its first loss in many years, the company is investing for the future, which will pay off significantly once the global economy starts recovering. In addition, the company is dealing with higher returns as consumers cut their discretionary spending. 

Boohoo prospects are pretty promising from both a fundamental and technical perspective, and I would buy the shares at current prices. However, there are no guarantees that we will get a rally soon. 

*This is not investment advice. 

Boohoo share price.

Source: IG.com

The Boohoo share price rose 4.68% to trade at 41.34p, rising from Tuesday’s closing price of 39.49p.


YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading