Watch these Adobe price levels after stocks plunge amid weak outlook

Adobe (ADBE) shares fell Thursday after the multimedia software maker posted disappointing current-quarter guidance that overshadowed better-than-expected fiscal third-quarter results.

Although the San Jose, California-based company’s shares are up about 28% in the past three months, they remain underwater this year as corporate customers continue to spend cautiously on premium software products amid economic uncertainty and high interest rates.

Below, we’ll take a closer look at Adobe’s chart and use technical analysis to identify important price levels to watch following its earnings announcement.

Breaking up an ascending triangle

Adobe stock has been trading in an ascending triangle since late February, with the stock price breaking above the pattern’s upper trendline on the highest trading volume since late June ahead of the company’s quarterly earnings. Furthermore, the 50-day moving average recently crossed above the 200-day MA, forming a golden cross, a chart signal indicating a new uptrend.

Despite bullish technicals, the stock is poised to break out of the lower triangle trendline on Friday, which could trigger a new downtrend. The stock fell 9.1% to $533 in after-hours trading on Thursday.

Watch these key support levels

If Adobe stock continues to decline following its earnings release, investors should watch several key support areas on the chart.

The first hovers around $500, which is where the stock could find support in the form of a psychological round number and a horizontal line connecting many of the peaks and troughs from June 2023 through August of this year.

A close below that level could see the stock fall to $439, where investors could look to buy near the pre-gap consolidation period during the stock’s impulsive upside between May and June of last year. This region also closely corresponds to the apparent swing low in May 2024.

The next lower level to watch is $386. This is an area that could see support near several highs that formed on the chart from early February to late April of last year.

Finally, a longer pullback could see the stock fall to the $333 level, where the price is likely to find buying interest near the May 2023 swing low. This level is also in line with the measured price objective for the move, which calculates the distance between the two ascending channel trendlines in points and subtracts that amount from the pattern’s lower trendline. ($550 – $217 = $333)

Key resistance level to monitor

In a countertrend move in Adobe stock, traders should closely watch the $550 area where the price could encounter selling pressure in case of a retest of the lower trendline of the rising channel.

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On the date of writing this article, the author did not own any of the above securities.