APPLE after having managed to stage a big upward move from 382$ to 463$, it now returns downwards with increased volume. Prices managed from late April to break short term resistance levels and reach the previous important high near 470$. The longer term downward sloping trend line has been broken upwards as shown in the chart below.
This rise that took an entire month to complete at 463$ has hit the important resistance level at 460-470$ area. One worrying signal regarding the upward move is the declining volume. On the other hand, during the decline from 463$ to 428$ the volume has been rising. This is not usual if we take as granted that the rise was an wave and the pull back the correction.
The bullish scenario implies that an upward thrust completed at 463$ and is now back testing the broken blue trend line that was intact during the entire decline. As shown in the chart below we see that the decline from 463$ has reached the 50% Fibonacci retracement level.
This is a good level for a bottom if the downward move is a correction. Our view is that a small bounce could be expected but it is more probable to see lower price levels as low as the 61.8% Fibo retracement. Moreover we would like to see increasing volume as prices rise. Additionally we should not that if you feel bullish your stop should be 382$ lows. For the time being the downward move from 463$ is in 3 waves thus corrective. If it unfolds and completes 5 waves down, that would be another bad sign for the bullish scenario. The bulls will get more confident if prices start to grind higher from these levels and the important resistance at 460-470$ area is broken upwards.
As always, thank you for taking the time to catch up on my thinking. Don’t forget that you can try our services for free for 1 week. Last trade we made in APPLE was a sell at 450$ and a buy close at 434$.