Adidas Technical Analysis: Decreasing Bullish Momentum and Head and Shoulders Pattern

Date: May 9, 2024

Timeframe: 4-Hour Chart

General Overview:

Since February 12, Adidas stock has been in an uptrend, trading above the 100-period moving average. However, after failing to reach the April 25 peak (233.76) and the lower high on May 5 (226.86), bullish momentum seems to have declined, and the price has entered a sideways trend.

 Pattern Analysis and Outlook:

– Head and Shoulders Pattern: The price correction since early May has formed a head and shoulders pattern, though it isn’t complete yet:

  – Left Shoulder: 231.06

  – Head: 233.76

  – Right Shoulder: 226.86

– Neckline: The Wednesday breakdown of the 222.38 support indicates sellers are trying to complete the pattern. If sellers can break the neckline on Thursday, further downward pressure is possible.

Key Levels:

Supports:

  – 100-Period Moving Average: The 219.25 support is the first bearish target.

  – 215.36: The next objective.

  – Uptrend Line: If the decline continues, the 209.81 support and the uptrend line could be at risk, and a confirmed breakdown could indicate a trend reversal.

Resistances:

  – 226.86: Breaking this resistance could restore bullish momentum.

  – 233.76: Reaching this peak again may indicate a resumption of the uptrend.

Oscillators and Indicators:

– Moving Averages: The convergence of the short-term 20 and long-term 100 moving averages indicates a reduction in bullish momentum.

– RSI: The Relative Strength Index has dipped below 50 into the oversold region.

– MACD: MACD bars are also heading towards zero, with their crossing below the signal line indicating waning buying strength.

 Conclusion:

Completion of the head and shoulders pattern is crucial to confirm a continuation of the downward trend. Key support levels are at 219.25 and 215.36. Otherwise, to resume the uptrend, buyers need to break through the 226.86 resistance and reach the 233.76 peak.