Boohoo (LON: BOO) share price has done well in the past few months, as I predicted in my last article. The stock is approaching 40p, meaning that it has soared by over 40% from its lowest point in 2023. Still, despite this improvement, Boohoo is one of the most shorted British stocks and is much lower than its all-time high.

Boohoo, like other British fashion retailers, is going through a rough patch as the UK economy moves into a recession. It is also facing substantial competition from Chinese e-commerce companies like Shein and Temu. 

However, after years of languishing, there are signs that Boohoo can be a good contrarian buy. Besides, it is still a popular brand in the UK that is implementing a turnaround strategy. Most importantly, it is now being backed by the head of Fraser’s Group, one of the most popular British retail companies.

There is a likelihood that the company will narrow its losses by cutting costs and boosting efficiency in the coming months. The most recent Boohoo results showed that the management has started to boost its EBITDA margin from 4.0% to 4.3%. It has also improved its inventories.

To be clear. Boohoo’s recovery still has a long way to go, especially now that the economy is not doing well. Also, I have been wrong about Boohoo before. In January last year, I predicted that the stock would do well in 2023 but that did not work out well.

The company also faces heightened risks, especially now that its working environment issues have resumed. It is also facing strong competition, which could affect its profitability in the future. However, I believe that the company is a good contrarian bet for 2024.

BOO chart by TradingView

A key reason why Boohoo stock could recover this year is that it has formed two bullish chart patterns. On the daily chart above, we see that the stock has formed an inverse head and shoulders pattern. In most cases, this is one of the most bullish signs. Its neckline stands at 41p.

The stock has also formed a double-bottom pattern at 32.97p whose neckline is at 40p. Again, a double-bottom pattern is a highly popular bullish sign. It has also soared above the 50-day moving average.

Therefore, the outlook for the stock is extremely bullish. This view will be confirmed if the stock moves above the neckline at 41p. A move above that level will see it continue soaring as buyers target the resistance point at 50p.

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