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Market Analysis

AAPL Is Setting Up Again

In chart 1 below, the weekly auction (left side) shows price rejection above the $116.50 price level, while the daily auctions (right side) that developed on Wednesday and Thursday are clearly '5 percent' days (see definition on chart). Hence, a move above $116.50 should be construed as a bullish signal, which should consequently be confirmed once this week's high of 116.73 is exceeded.

Chart 1. Weekly and daily auctions.

In chart 2, the three-day consolidation appears to be tracing out a bullish symmetrical base (a potential inverse Head-and-Shoulders consolidation pattern) whereby a break above the neckline would coincide with a move above the aforementioned $116.50 level, thus implying further upside. On the other hand, should this pattern fail to live up to expectations, the bulls would be expected to make a stance near the [114.90-115.20] zone (i.e., the bottom of the two  '5 percent' day ranges).

Chart 2. A potential inverse HS consolidation pattern.

Finally in chart 3, an AB = CD pattern is shown to have reached its PRZ (Potential Reversal Zone), a convenient spot for the stock to take a breather and consolidate its recent gains. But make no mistake about it, the '5 percent' day sessions that developed on Wednesday and Thursday will be the telltale early next week. One way or the other, price will break out of the [115-116.73]. 

Chart 3. AB = CD pattern. A break above this week's high should be construed as a bullish signal.

Trade Smart,

Peter Ghostine (@peterghostine)

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