Adobe Poised For Breakout
Gary S. Morrow | Aug 18, 2020 03:33PM ET
Shares of Adobe (NASDAQ:ADBE) have been tracing out a narrowing consolidation pattern (bull pennant) since early July. This healthy rest followed an 84% gain off the March lows. During this phase Adobe was able to work off an extremely high overbought reading (daily MACD). This week, shares have returned to the upper band of the consolidation. A fresh rally leg may be on the way.
Adobe held its 50-day moving average at the August lows, which provides solid footing.
It is also working on a fifth straight higher monthly low.
A key hurdle in the near term is the $465.00 area (August high). Once past that, we expect the stock to move well into new all-time high territory. On the downside, a close back below last week’s low( $430.00) would send a clear warning sign that a more drawn-out consolidation will be needed before a new rally leg can develop.
Note: We are long Adobe in some managed accounts.
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