After a hard beating in the end of December, Adidas AG (ETR: ADS) stock sold off sharply, breaking its long-term upwards moving trendline drawn from the low of the 10th of November 2016. But everything started changing during the first days of the New Year, when ADS started picking up interest from investors again, at the price of around 180 euros per share. This led to Adidas retracing back up to the levels seen in the first half of December, which also placed the stock back above the aforementioned upside trendline. For now, we will aim higher, as the buying momentum is in full swing. But one should remain cautious further on, as there is a good chance ADS might run into its medium-term downside resistance line, taken from the high of the 28th of August 2018.
Because the Adidas stock is now trading above the aforementioned long-term upside trendline, we will target the next potential area of resistance at 201.10, marked near the high of the 13th of December. The price could get held near that area, or we could even see a bit of a correction back down. If such a move occurs, but the price fails to drop below the upside trendline, this might be a good opportunity for buyers to step in again and drive the stock back up to the 201.10 barrier. A break above that barrier, may clear the path towards the next potential resistance zone at 205.10, which is the high of the 22nd of November 2018. ADS could test the previously-mentioned medium-term downside line around there as well.
Looking at our oscillators, the RSI and the MACD, both are in support of the above-discussed idea. The RSI has shifted above 50 and points to the upside. The MACD is, not only back into the positive territory, but also continues to point higher, being above its trigger line.
Alternatively, a strong reversal back down and a break below the long-term upwards-moving trendline, could raise fears in the bull-bloc. The situation may worsen for investors if the price drops below the 196.40 hurdle, marked by yesterday’s low. This way, the increased negativity around the stock, could mean that it has a good chance for a further slide, where the next potential support area might be around the 192.25 obstacle. If that obstacle is only seen as a temporary pit-stop, a further price depreciation could drag ADS to the 189.00 level, marked by the low of the low of the 7th of January and the high of the 19th of December.
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