Adobe Shares Tumble 4.77% Amid Death Cross and Falling Knife Pattern, Eyeing $325 Support

Adobe (ADBE) has experienced a sharp decline, closing at $333.30 on January 2, 2026, marking a 4.77% drop for the session and a 5.79% loss over four consecutive sessions. This bearish momentum is evident in candlestick patterns, with a series of lower closes forming a "falling knife" structure, suggesting aggressive short-term selling pressure. Key support levels emerge around $331.64 (the recent low from January 2) and $325.07 (a prior trough from November 17), while resistance is likely clustered near $349.99 (December 31 high) and $356.43 (December 12 peak).

Moving Average Theory

The 50-day, 100-day, and 200-day moving averages all appear to be trending lower, with the price currently below all three. This "death cross" configuration reinforces a medium-term bearish bias. For instance, the 50-day MA would likely be around $340–$345, while the 200-day MA is likely in the $350–$355 range, indicating a widening gap between short-term and long-term averages. A break below the 200-day MA could trigger further institutional selling.
MACD & KDJ Indicators

The MACD histogram has turned negative and is contracting, reflecting weakening bullish momentum. The KDJ indicator (Stochastic) shows the %K line below the %D line in oversold territory (below 20), suggesting potential for a near-term rebound. However, divergence between the KDJ and price action—where the %K line fails to rise despite a minor rally—could signal a false recovery.
Bollinger Bands
Volatility has expanded as the price approaches the lower Bollinger Band, with the 20-period standard deviation indicating a 1.5–2.0σ deviation. This suggests the stock is in an oversold range, but without a clear reversal pattern, the bands may contract again before a meaningful bounce.
Volume-Price Relationship
Trading volume surged to 5.6 million shares on the January 2 session, validating the bearish move. However, the volume-to-price ratio (V/P) has not shown a new peak, implying the decline may lack follow-through. This dissonance suggests caution, as volume-driven moves often require sustained participation to maintain momentum.
Relative Strength Index (RSI)
The 14-period RSI has dipped below 30, entering oversold territory. While this typically signals a potential rebound, the RSI has remained compressed below 40 for several sessions, indicating a strong bearish bias. A closing above $340 would be necessary to trigger a meaningful RSI rebound, but this is contingent on moving averages and volume aligning with such a move.
Fibonacci Retracement
Applying Fibonacci levels to the recent high ($464.64 on March 12, 2025) and low ($333.30), critical retracement levels include 38.2% at $400.85 and 61.8% at $368.22. The current price near $333.30 suggests a 76.4% retracement, with a break below $325.07 (the November 17 low) likely to target the 88.6% level at $322.50.
Confluence and Divergence
The most robust confluence occurs at the $325.07 level, where Fibonacci support, a prior candlestick trough, and a potential RSI bounce could align. Divergence exists between the oversold RSI and stagnant KDJ, hinting at a possible false recovery. Traders should monitor volume spikes and moving average crossovers to confirm any reversal.
Probabilistic Outlook
While the immediate outlook remains bearish, the confluence of oversold indicators and Fibonacci support suggests a 40–50% probability of a short-term rebound to $340–$345. However, a break below $325.07 would increase the likelihood of a test of $320–$322, with further downside risk dependent on broader market sentiment and earnings catalysts.