Reopening has aided luxury stocks, but the gains here have been relatively limiting.
Burberry overview, technical analysis, strategies, and levels
From a fundamental standpoint, lockdown restrictions have been easing in Europe with stores reopening, but there are plenty of factors to consider including a lack of tourists thus far, fears of a second wave that will dent sentiment, and rising unemployment that may deter plenty of shoppers from luxury goods and put the focus on necessities instead.
In China, stores have already reopened much earlier and have returned to growth. However, a part of that may hurt future global sales that rely on Chinese tourists who normally make two-thirds of
Their luxury purchases abroad, and have instead opted to purchase domestically due to travel restrictions.
The drop in sales across the luxury sector have pushed some luxury companies into raising prices to defend margins, and that might come as a boon for Burberry given consumer accessibility to its mid-tier products may mean that uncertainty and a drop in incomes will push the mid and lower tiers of luxury shoppers into avoiding pricier products.
As for last week’s price movement, after briefly breaching its short-term resistance level of 1498, last Thursday’s gains were short-lived thanks to Friday’s significant retracement off of a significant mid-term resistance level near 1609. The short-term technicals have started to look more bullish with its price above all its main short-term moving averages and its weekly bear trend line broken.
Conformist technical overview strategies involve reversals on the 1st (or if market volatility rises significantly, its 2nd) Support and Resistance levels. That would ideally mean waiting for the level to be significantly broken before initiating as the market retraces back to its key pivot points. Fading strategies would be prone to getting stopped out on any uptick in volatility and should be avoided, while those looking to trade contrarian technical overview strategies can consider breakout opportunities on the 1st levels for profit-taking beyond the 2nd levels.
The main long-term weekly moving averages (50, 100, and 200-week) are relatively close to each other, and in turn aren’t that far off the company’s share price and the creation of further buy signals.
IG client* sentiment for Burberry
Retail sentiment remains heavy long at 76% anticipating further price gains, but given where those longs have been initiated far more upside movement may be needed to unwind those longs in profit.
Burberry Weekly Chart
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