Vodafone share price: rare pattern points to 13% upside

Vodafone (LON: VOD) share price has bounced back in the past few weeks as investors bet on the company’s recovery. The stock jumped to a high of 82p on Friday, the highest point since May 16th. It has jumped by more than 17% from the lowest level this year.

Vodafone turnaround continuing

Vodafone has been under intense pressure in the past few years. Growth in key markets like Germany, UK, and India has slowed down while the company has a big debt load. 

The most recent results showed that the company’s revenue rose by 3.7% to over €10.7 billion in its first quarter. Germany’s revenue dropped by 1.3% to €3.14 billion while Italy fell by 1.6% to €1.13 billion. UK’s revenue jumped by 5.7% to €1.6 billion.

The management is now working to reduce its debt load and implement a major turnaround. On Friday, the firm announced that it will exit its Spanish business by selling its assets to Zegona Communications.

Its Spanish business has been going through a rough patch in the past few years. The service revenue plunged by 3% in the past quarter. Its mobile contracts by 87k while broadband revenue fell by 65k. The management attributed this to rising churn after Vodafone hiked prices.

Vodafone is also considering more asset sales. Just last year, it rejected a bid for its Italian business by Apax and Iliad. At the same time, it is attempting to merge with Three, a British company owned by CK Hutchison. 

Forex is another major concern that Vodafone is facing. Turkey, which constitutes 4% of total revenue has seen its currency plunge to a record low. Similarly, the South African rand and the Egyptian pound have dropped sharply in the past few months.

Vodafone share price forecast

The daily chart shows that the VOD stock price formed a double-bottom pattern at 70p. In price action analysis, this pattern is one of the most bullish signs. It has now moved above the neckline of this pattern at 79.10p. This price also coincided with the lowest swing in December last year. 

Vodafone share price has also moved above the 50-day and 100-day moving averages. It has also retested the 200-day moving average. Therefore, there is a likelihood that the shares will continue soaring as buyers target the key resistance point at 92.2-, the highest point on May 3rd. If this happens, the stock will rise by 13%.