Stock of the day: Adobe

We’re starting off the new week with an analysis of Adobe and its very promising bullish pattern. It’s still too early to claim a definite bullish victory, but it’s better to be aware of possibilities that can happen in the near future than to discuss something that’s already happened, right?

Adobe is currently creating an interesting inverse head and shoulders pattern (green). The formation is almost finished, with the price already managing to draw the right shoulder. There’s one final thing to do here and that’s the breakout of the neckline (red). Interestingly, the neckline isn’t placed randomly rather it’s present in an area which can be considered a crucial, mid-term resistance.

The importance of this resistance comes from the fact that apart from the neckline, we have a 23.6% Fibonacci there and the price used this area as a support in the mid- May 2021 (yellow). What should activate the buy signal here? One thing really: The price closing a day above those three resistances, and that’s what buyers should definitely anticipate.

On the other hand, if the price fails to break those levels and bounces off the neckline it will bring a sell signal. As long as we stay below that level, we can’t exclude that scenario.