Stock of the day: Zalando

On the last day of this week, we prepared the analysis of Zalando. Previously, we analyzed this stock last year in November and our stance was undisputedly bearish. We concluded our piece in the following manner:

“Sentiment is definitely negative and with this selling pressure, chances for a breakout and a further slide are quite significant. We stay bearish, as long as the price is below the 23,6% Fibonacci. This resistance seems relatively safe for now”

Back then, the price was around 74 EUR, now it is 36 EUR. We can easily claim that this was our “big short”! The price was dropping almost the entire time since our analysis was posted. What is interesting is that the down trend is very technical. We have decisive drops paused by handsome corrections (red lines). We had wedges, pennants and flags. All of that ended with a breakout of the lower lines and drops – beautiful.

Today, the price is inside a correction again. We are in a wedge and it seems that the price is aiming its upper line. We also have a nice horizontal resistance there (blue – 42). As long as we stay below that line and inside of the wedge – the sentiment is negative and every rise can be considered as a bargain. When the price will break the blue resistance – an up trend may start but current chances for that are rather low.