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Support & Resistance

Adobe Stock between June 26'23 and July 13'23

Price points and how to read them

Blue areas: We placed those levels manually with tools provided by TradingView. We look at areas where the stock price is trying to break through but fails to do so multiple times. Those levels are called resistance. The price is not ready to break through previous highs just yet. The same goes for the lower area. The price comes down to look for support, but doesn’t cross the lower blue line to indicate a bearish (decreasing) trend. 

Back Test: When stocks experience a sudden surge in volume, traders need to be cautious. As the bullish breakout may have been a fake-out (stock crosses resistance line and reverses immediately), we waited for the price to approach the blue shaded area again before the stock actually breaks out in our favor. Here, the price didn’t break below our resistance level, so we got in.

We actually took this trade. But why?

  • $ADBE had reported higher than expected Q2-earnings in mid-June of 2023, indicating a good outlook for the future.
  • After a cool-down, the stock started  swinging between $480 and $490.
  • We took this inidcator to start drawing support and resistance areas (see above).
  • We identified bullish volume on June 10’23, which had the price break through the top resistance line.
  • Back-Test was successful for a long-entry.
  • As a result, we profited of off a solid breakout.

Note: Past chart performances as well as chart patterns, candlestick patterns, and other strategies illustrated on our website may show the history of the investment associated with those performances, but is not necessarily indicative of future investing results. 

Disclaimer: This content is not intended as investment advice. Stocks, cryptocurrencies, as well as other markets have large potential to be volatile. That means that price changes may fluctuate rapidly in either direction. Therefore, consult with your financial advisor before making investment decisions.