Adobe Stock Surges 5.22% as Bullish Engulfing Pattern Signals Reversal Momentum

Candlestick Theory
Adobe's recent price action reveals a bullish engulfing pattern forming over the past three sessions. On August 11th, a long red candle closed at $333.65, signaling strong selling pressure. However, subsequent sessions generated two consecutive green candles, with the August 13th session closing at $351.07 and engulfing the prior red candle's range. This suggests a reversal momentum. Key resistance is established at $357–$364 (March–April 2025 consolidation zone), while support sits near $330, validated by the August 12th low of $330.04 and reinforced by the 100-day moving average.
Moving Average Theory
The 50-day moving average ($357.50) currently caps upside momentum, with Adobe trading below this level at $351.07. However, the stock maintains a bullish posture above the 100-day MA ($344.80) and 200-day MA ($419.60). The 50/100-day MA bearish crossover in early July initiated a downtrend, but recent convergence between the 50-day and 100-day MAs near $350 indicates potential trend stabilization. Sustained trading above $357.50 would signal a short-term trend reversal.
MACD & KDJ Indicators
MACD (12,26,9) shows a bullish crossover emerging, with the histogram transitioning from negative to positive territory—a potential early reversal signal. KDJ (14,3,3) aligns with this view: the %K line (25) has crossed above %D (20) from oversold conditions, though both remain below the 50 midpoint, indicating nascent bullish momentum. Divergence is noted versus the June–July downtrend, where price made lower lows while KDJ stabilized, foreshadowing the current rebound.
Bollinger Bands
Bollinger Bands (20-day, 2σ) contracted sharply in August, with bandwidth narrowing to 4.5% versus July’s 7.2%, reflecting declining volatility. Price rebounded from the lower band ($338) on August 12th and now tests the midline ($345), targeting the upper band near $364. The volatility squeeze increases the probability of a directional breakout, with the current price recovery favoring upside resolution.
Volume-Price Relationship
The 5.22% two-day rally occurred on rising volume (August 12: 3.57M shares; August 13: 4.37M shares), validating bullish conviction. This contrasts with the August 11th decline on higher volume (4.37M shares), which signaled capitulation. Volume divergence also occurred during the July downtrend, where sell-offs displayed diminishing volume, suggesting weakening bearish momentum. Current volume patterns support sustainability if accumulation persists above the $340–$345 support zone.
Relative Strength Index (RSI)
The 14-day RSI rebounded from oversold territory (29.5 on August 11) to 44.8, exiting the "bearish exhaustion" zone but remaining below the neutral 50 level. This implies room for further recovery before overbought risks emerge. Bullish divergence is evident: RSI’s higher low on August 11 versus its prior low in March accompanied price making a lower low, warning of weakening downside momentum.
Fibonacci Retracement
Applying Fibonacci to Adobe’s 2025 swing high ($586.55 on September 12, 2024) and swing low ($337.55 on August 11, 2025), key retracement levels are identified. The 38.2% level ($412) was breached decisively in June, converting to resistance. Current price action tests the 23.6% level ($351), aligning with the 50-day MA. Confluence exists here; a close above $351 opens the 23.6%–38.2% retracement zone ($351–$412) for recovery. The 50% level near $462 remains the primary resistance for any sustained uptrend.
Confluence and Divergence
Strong confluence exists at $350–$351, where the 23.6% Fibonacci, 50-day MA, and Bollinger Midline converge. A decisive close above this zone would confirm bullish momentum, validated by MACD/KDJ crossovers and volume-supported price action. The sole divergence occurs in the RSI’s slower recovery relative to price, suggesting near-term consolidation before further gains. However, multi-indicator alignment favors a high-probability rebound toward $364 resistance if $351 holds as support.