Hi everyone. Today I’ll be covering a software company:
Adobe Inc. (NASDAQ: ADBE)
On the monthly chart, we can see that ADBE is clearly in a long-term bullish uptrend since its IPO in 1987 with higher highs and higher lows. The current RSI of a lower high and higher low is mimicking the shorter-term consolidation pattern on ADBE, which I’ll get to in a second.
On the weekly chart, we can see the bullish pennant consolidation pattern that we saw on RSI with lower highs and higher lows. We’re nearing a bullish crossover event on the Stochastic that could lead to a reversal from current levels.
On the daily chart, I note that ADBE does not have a tendency to show divergences on RSI. Something I noticed with time is that not all stocks have such salient reversal indicators. That being said, the Stochastic formed a bullish divergence back into support, and we also retested prior resistance (Apr-May this year) at 491.68.
As long as ADBE continues to hold above 491.68, it should push back into the 540.27-572.98 ER gap and eventually back into the resistance trendline (in red) for another attempt at a breakout. In the long term, I am expecting ADBE to go above 700s. Should ADBE lose its 491.68 level, then we will see he full gap fill to 462.39. Subsequently, ADBE could even go back and retest its long-term IPO trendline support (in purple).
In light of the favourable technical setup, I am bullish on ADBE.
Sentiment: BULLISH
Invalidation: Close below 491.68
Summary (with Price Targets - NFA):
Bullish pennant configuration with a short-term price target of 611.58 (filling the bearish gap downs at 540.27-579.79 and 608.39-611.58) and a longer-term price target of 700+ (new ATHs)
A close below 491.68 most likely leads to a structural breakdown and a move back towards 440.63
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