Bullish RSI Divergence - Time to buy ADBE?Every Saturday I open the weekly charts. The first chart I opened this week was ADBE.
I think ADBE stock has been unfairly battered recently. The revenue has been steadily rising despite the stock price dropping. That itself is a bit of bullish divergence.
Also, it needs mentioning that I'm photographer by trade. I use ADBE products every day. I understand the competition they're now facing. I also understand that for the past 20 years, every time a new product has come out with a feature drawing people away, ADBE has added it quickly and made that other program useless. Moreover, while all other stocks are getting high valuations, ADBE is being hurt by it - despite their AI development being top notch.
ADBE has a forward P/E somewhere around 15x. That's great value.
Ok, so let's go over to the chart and see why I think it's time to start accumulating ADBE.
1. Price action is in a falling wedge. This is bullish pattern. It means that the selling pressure is slowly dying off. Eventually, these patterns generally break upwards
2. Ancient support. There's a lot of support here from late 2022 and 2023.
3. There's bullish divergence on the RSI. The last time there was bullish divergence was around April 2022. When that happened, the price $334 to $450 in a couple months. Of course, afterwards it crashed down with everything else on the market in the summer (from $450 down to $273). After that bottom, it went on a wild rally from $273 to $630 over the following 14-16 months.
So here we are, will history repeat? I'm going to start DCA'ing a position on Monday. But I won't be doing a traditional DCA. More a RDCA (Red Day Cost Average), any day ADBE closes red, I'll add.
I have 2 targets:
- Target 1 = $415 where the neckline is of the double bottom pattern).
- Target 2 = $480 there's a volume gap up to $480 if the pattern breaks.
I'll go active here on Monday, and update every time I add.
