ADBE has downside risk due to AI competition and technical patterns; likely to fall after earnings.

The shares of many such companies are still in losses, such as Apple, Oracle, Adobe, etc. So, Adobe is almost at the bottom of this list, and to me that's one of the risks, especially not directly because of generative AI.

If you need generative AI to create something, you probably weren't already a big Photoshop user. The point is, AI is enabling other companies to create competitive products that may be cheaper or more user-friendly for customers.

So, we can also see now that it has fallen a bit in the pre-market.

We are now at a position close to 275. Therefore, in case of a downside move, areas like 265 and 250 should be kept in mind, which are relatively low levels in recent times.

It is essentially a rising wedge pattern, where two trend lines are merging into each other, pointing upwards, which is often considered a bearish or bearish signal. Of course, it could go either way, if we start to break out to the upside like we have recently and continue to test these upper limits.

The points we should keep an eye on are the highs we saw after the gap down or decline at 270 or 280, 284, and also 291, where the gap started.

There are some other relatively high points here, around 299 and 306. The moving averages we follow show that there is a confluence here. Our shortest and longest moving averages coincide around 284 or 285.

Our 5-day dark blue and 251-day orange moving averages indicate our 1-week and 1-year exponential moving averages. So, we're at that support level as of yesterday's close, but as I said, now we'll be near our 21-day EMA or monthly EMA, which is shown here in teal around 273.

The RSI is indicating that price or momentum is struggling to enter the overbought area. There is not much strong pressure above 70. The earnings report could be a catalyst for changing this situation.

Finally, our volume profile study shows that there was some trading activity between 290 and 305, and our point of control or most trading area is between 237 and 260. The point of control is near 246.

If your outlook is bearish ahead of the earnings report, we can trade the September 18 term, which is our next monthly term, 14 days away, at about 9.8% plus or minus.

For example, the trade is September 18th 265-255 Put Vertical, 250 Debit Paid. So, a bearish view, where the maximum loss is 250 debits given to us.

If we can reach the 255 strike price, the maximum profit will be 750. That is, the risk to reward ratio here is roughly one to three.

Our break-even is 262.50, which is 4.5% downside compared to our expected movement of about 10%. This falls within the realm of possibility, especially if earnings results are disappointing.

Therefore, the price is likely to fall after the earnings report.