Is Lovisa Holdings Share Price About to Fall Again? (ASX:LOV)

Is Lovisa Holdings Share Price About to Fall Again? (ASX:LOV)

The popular women’s jewellery company took a beating through the first half of 2020.

What started for Lovisa Holdings Ltd [ASX:LOV] as a bit of a pullback in October 2019, turned into a full-blown free fall as the COVID-19 pandemic got into swing.

Wiping off 83.44% of the LOV share price into the 2020 March low, Lovisa managed to recover somewhat to trade at $7.68 at the time of writing. But where to from here?

ASX Lovisa Share Price Chart 1

Source: Optuma

What’s going on with Lovisa?

From the start of 2019 Lovisa had been steaming along, their stock price boosted up over 150%, with stores operating in Australia and internationally in 15 countries.

Then along came COVID-19.

COVID-19 caused widespread lockdowns of public places including shopping centres worldwide.

The lockdown of stores due to the pandemic and the fall in global markets significantly impacted Lovisa’s stock price.

Falling from $14.13 in October 2019, which was an all-time high, to $2.34 in March 2020.

After a bit of a recovery the price is now moving sideways…where can it go from here?

Where to next for the Lovisa share price?

A lot of global economies are in a bit of a mess right now. That effects everything both good and bad no matter what business you are involved in.

In the case of Lovisa we can zoom out to the monthly movements of the stock price, by taking in the wider picture it can help make assumptions about where the price may be heading.

ASX Lovisa Share Price Chart 2

Source: Optuma

By looking at a monthly chart and using Elliott wave theory it can give an idea of where the price is.

Wave 5 (the green one) moved up just over 75% of the previous impulse wave (purple one, wave 3) which is in line with the structure rules for wave 5.

The price then fell into a potential wave A before shooting back up.

This is the interesting bit.

The potential wave B moved up 50% of the previous wave — typical movement for a wave B is to retrace between 50–78.6% of the previous wave.

If this assumption proves to be correct, then the price may be moving to fall into another decline.

ASX LOV Share Price Chart 3

Source: Optuma

The last few weeks saw Lovisa move into a bit of a sideways pattern, indicating the direction of the stock is still up in the air.

With the most recent high being $8.58 and low being $5.65, one of these levels will have to be broken for the stock to be considered bullish or bearish.

Keep in mind to look for the supporting volume with any movement, as without confirmation of a move you may just be getting trapped in a false breakout.


Carl Wittkopp,
For The Daily Reckoning