$AAPL–Monthly Doji, Weekly Bearish Divergence, Daily Trendline Breakouts and what not!

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Every third word I hear from stock market guys is Apple. It has been on the wires almost everyday and moves like a currency (perhaps due to high volume). So, I decided to look at the technicals for the company and do a small piece on it.

Below is the monthly chart:

 

As you can see that the strong uptrend has been halted for the time being. But the way it has been stopped is quite interesting. The stock has a bearish doji candle at the end of an impulsive move. This implies weakness in the bulls. More importantly, we have a bearish divergence on both the RSI and the Stochastics on the MONTHLY! Now that cannot be a good sign for the bulls.

 

 

The weekly chart shows the same divergence on the RSI and Stochastics. We can also see that the last candle had a long shadow, which moved all the way above the previous candle’s high and then it came all down to form a shaven head. The long shadow indicates that the bulls tried to push the prices upwards, but they couldn’t hold the bearish resistance for long. What’s interesting is that Apple closed below the previous swing high support @ 616. This also happens to be the 50% retracement level (of 528 to 704 move).

Let’s take a look at the daily charts, shall we?

 

As you can see, the price moved below all the three moving averages (30, 50 and 100 SMAs). It broke a couple of trendlines and a fibo confluence (highlighted as orange area). The strength of bears in all these breaking and shaking is obvious.

 

Targets: I think the logical targets would be initially 595 and then 570 area. Now it is NOT necessary for $AAPL to start moving down immediately. It might consolidate a little bit and perhaps make a small retrace above to touch (and kiss!) the trendlines.

Alternate Scenario: I think if $AAPL crosses back above the two trendlines and gives a daily closing, we might see the strength of bulls return again. The break lower would become a false breakout, possibly fueling the bullish sentiment a lot.

P.S. Apple will announce a smaller version of its tablet next week as well its earnings for third quarter. And I don’t have any positions in $AAPL and don’t plan to have any!

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