Don't Ignore This Chart!

Apple Fails at One Moving Average and Breaks Another


Apple shows signs of a long-term downtrend because it failed at a key long-term moving average and just broke a medium-term moving average. The daily candlestick shows AAPL gapping down in early November, trying to fill that gap with a bounce in mid November and ultimately failing with a peak near 120 last week. Notice that the November-December peaks are just below the falling 200-day moving average, which suggest a long-term downtrend. AAPL fell sharply the last five days and broke below the mid November low today. Even though the stock is short-term oversold after a decline from 120 to 111, the long-term trend appears to down and I will show a downside target in the next chart. 

The weekly chart shows the Fibonacci Retracements Tool to estimate price targets. Typically, a security will retrace 38.2% to 61.8% of an advance with 50% being in the middle. This is a big zone so we need to use other technical tools to confirm a downside target. The September-October 2014 lows mark potential support in the 95 area and this is confirmed by 61.8% retracement. The August spike low is also in the 95 area. Keep in mind that price targets should be taken with a grain, or maybe a bucket, of salt. The price target is only valid as long as downtrend remains. A close above 120 would negate this bearish scenario. 

Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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