Adobe Systems – Potential Triple Top

By | October 10, 2018

The performance of Adobe (ADBE) over the last two years has been nothing short of spectacular. It was trading around $100 at the end of 2016 and it traded above $275 last month.

But after touching the $270 to $275 level three times last month, Adobe shares began to show signs of weakness. This month they have gone straight down, piercing through the 50 day moving average, and three levels of trend line support.

It may not look like it on the chart but this decline is the lowest the stock price has gone under its 50 day average in over a year. The breakdown sets up a retest of the 200 day moving average. Adobe has not even touched its 200 day average since late 2016.

The relative strength index is tracking well below its center line, reflecting the loss of positive price momentum, and Chaikin money flow is in negative territory on heavier than usual volume.

This is not the kind of price action that investors in Adobe have seen in quite some time. The highs last month clearly look like a triple top.

But even if the stock continues to pullback, long term holders will likely wait to see the action around a retest of the 200 day moving average before making any decisions. Short sellers, on the other hand, have a speculative trading opportunity.

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