Hugo Boss (ETR: BOSS), together with other major fashion brands across the globe, has been hit heavily by the pandemic and the lockdown measures that were taken earlier this year. Due to fallen consumer demand, some of these large fashion companies are now asking suppliers to delay their requests for payments for delivered goods to around 120 days, from the normal 10 days. Big fashion brands believe that such drastic measures are currently necessary, in order to withstand the negative effects of the coronavirus on their industry.
In order to keep investor trust, companies sometimes go through management restructuration. Recently, Hugo Boss came out with the announcement that the company will be replacing its CEO, who will leave on September 30th of this year, with a former Tommy Hilfiger Global & PVH Europe boss, who will commence his duties on June 1st, 2021. A few weeks ago, another positive headline surrounding BOSS came out. The Frraser Group (LSE: FRAS), a major UK holding company, which in its portfolio has brands such as SportsDirect, House of Fraser, Everlast and Lonsdale, has bought 5.1% stake in Hugo Boss.
That said, the technical picture of the stock, at the moment, is not very positive. BOSS has been sliding from around the beginning of June, while trading below a short-term tentative downside resistance line taken from high of June 9th. Today, we saw the stock opening with a small gap to the downside, which was enough to bring the share price below its medium-term upside support line drawn from the low of March 19th. Such a move may have cautioned new buyers, as it increases the chances of seeing a further decline.
Another drop below the lowest point of June, at 25.05, may keep new investors away for a bit more. BOSS may then drift to the 24.37 obstacle, marked by the low of May 29th, which could provide a bit of support. However, if the price continues to trade below both of the aforementioned lines, this may cause the stock to decline again. A break of the 24.37 hurdle might set the stage for a move to the 22.99 level, marked by and intraday swing low of May 22nd.
The RSI and the MACD, on our 4-hour chart, are both pointing lower. In addition to that, the RSI is still below 50 and the MACD is below zero and its trigger line. The two indicators seem to support the idea discussed above, because both are showing downside price momentum.
In order to shift our attention to some higher levels, the share price would need to get back above that upside line and break above the aforementioned downside resistance line. In addition to that, a push above the 26.31 barrier, marked by yesterday’s high, may attract a few extra buyers into the game. BOSS could then travel to the 27.43 obstacle, or even to the 28.29 zone, marked by the high of June 23rd. If the buying doesn’t stop there, the next potential resistance level could be at 29.28, which is the high of June 19th.
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