I last reviewed the charts of software giant Adobe (ADBE) back on July 31, when I wrote, "Traders should continue to hold longs. Raise stops to the $510 area now. The round number of $600 is my next price target." Let's check and see if anything has changed on Adobe's charts or with the indicators ahead of third-quarter earnings on Thursday.
In this daily bar chart of ADBE, below, I can see that prices have edged higher into August. Prices trade above the rising 50-day moving average line and above the rising 200-day line. The On-Balance-Volume (OBV) line shows a longer-term rise the past 12 months but perhaps the start of some weakness in August. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.
In this weekly Japanese candlestick of ADBE, below, I can see a mixed setup. Prices are in a longer-term upward trend as they trade above the rising 40-week moving average line. However, the two most recent weekly candles suggest caution with upper shadows around $570, telling me that traders are rejecting the highs. The most recent candle is a possible doji and a bearish candle pattern this week would suggest we are seeking a top reversal pattern play out. The weekly OBV line shows weakness from late July into August. The MACD oscillator shows narrowing but is still well above the zero line.
In this daily Point and Figure chart of ADBE, below, I can see an upside price target at $599 -- let's call it $600.
In this second Point and Figure chart of ADBE, below, I see the software is projecting a price target in the $704 area. Impressive.
Bottom line strategy: I don't know what ADBE will tell shareholders this week, but overall the charts of ADBE (above) are mixed. The price action on the candles are making me cautious, so traders who are long ADBE should raise stop protection to $525 from $510.
