Adobe (ADBE) has been a relentless powerhouse of a stock over the last two years with shares up over 150% in that time. But like many other market out-performers it has been experiencing an increase in volatility over the last couple of months.
This volatile price action can be seen on the weekly chart as a series of high wick or long-tail candles. These candles represent indecision. The bulls can’t keep the stock price up and the bears can’t take it down.
Still clearly, the long term trend is higher.
On the daily time frame, recent price action in Adobe formed a rising triangle pattern with the uptrend line following the rising 50 day moving average and horizontal resistance in the $235 area.
As Adobe shares have been consolidating, the moving average convergence/divergence oscillator has been making lower highs, in bearish divergence to the stock price. This is not unexpected as the underlying moving averages used in the construction of the indicator flatten. It does, however, reflect an internal loss in upside momentum as Adobe shares near the apex of the triangle and an ultimate decision point.