ADIDAS A.G. (ADS.DE)

Technical analysis

Price	€ 247.05	52 weeks range	€ 231.95 - € 335.05
Beta	0.87	Volume/ average	27.643/ 653.458
Sector	Cosumer Cyclical	Dividend	1.23%

Adidas AG is a German multinational, founded and based in Bavaria, which designs and manufactures shoes, clothing and accessories. It is the largest sportswear manufacturer in Europe and the second largest in the world.

Price

The stock has started a marked bearish descent since August 2021 and we believe that the strong support at € 250 combined with a possible break of the bearish trendline, could lead to a trend reversal of the stock.

Analyzing the price fluctuations since May 2019, we can see that the stock has fluctuated with some regularity between € 232 and € 300.00: the broad channel has often been respected, except for short periods above / below it.

Since mid-January 2022, the stock has begun to consolidate between € 232 and € 245.00: the rising lows of the last few weeks may not be sufficient reason for a change in trend, but the consolidation within this area warns of strong fluctuations in the medium to long term, as happened in the past.

On the weekly chart, the situation is similar and it is possible to notice more the "crossroads" to which Adidas is next.

Indicators

With regard to the MACD and RSI indicators, we can see a positive divergence with the price which, starting from December 2021, began to record increasing lows with a stock resting instead of -7-8%.

On the daily chart, we report MACD close to exceeding 0 (positive momentum) and the RSI very close to exceeding the 50 line.

On the weekly chart, we see a very extended MACD to the downside and close to a cross of the averages and a flat RSI, despite the negative swings.

Moving averages

On the daily chart, the 50-day average is playing the role of dynamic resistance: for this reason we believe that the confirmation of the trend change will be given only after a consolidation of the price above the moving average, which we estimate to be between € 255. -260.

On the weekly chart, we report how the price has been constantly rejected by the 9-day average and, looking at past fluctuations, its overcoming has then led to trend changes in the medium term.

Finally, we note how the price is currently below the 200-day average: an event that has only happened 3 more times since July 2014, followed by strong upward swings.

Conclusions

At the current price, we believe that ADS is an interesting stock not only to monitor but in which to start building, upon subsequent price confirmations, a medium / long-term position.

The strong support area at € 232 - 245, combined with the positive divergence of the MACD and RSI indicators, make us think of a possible trend reversal. Confirmation will be given, in our opinion, by a stabilization of the price above the average at 50 days in the area of € 255-260.00.

Once the average has been exceeded, a plausible short-term target could be the intermediate resistance at € 280 and then aim for the previous high of € 320.00

To conclude, we believe that ADS is in an optimal price range: the stock seems close to an upward reversal and an overrun of the 50-day average would confirm its direction.

Should the price be rejected again, we would identify € 200-215 as a possible purchase area.

Also from the point of view of sector analysis and relative strength with respect to the reference market (Euro STOXX 50) we are in favor of a recovery of strength by Adidas.

Entry range € 255.00 - € 260.00

Target 1 € 280.00

Target 2 € 320.00

Stop loss € 220.00