Apple shares have had a bumpy ride since the company's launch of a raft of new products on September 7. While the stock continues to act constructively through a multi-month lens, there is also no reason to jump the gun on it from a swing trading perspective although the first stabilisation signs did emerge on Monday this week.
On September 1
I outlined a trade view on buying Apple shares upon either a solid daily bullish reversal or a successful retest of previous technical resistance. Plenty of price action has taken place since then, which warrants an update.
On the bigger picture nothing has changed much for AAPL stock, where the longer-term support line remains the line in the sand by which trend followers and other bulls will live and die. The rally off the May lows did break the stock back above diagonal resistance and through this lens the question still remains whether this was the beginning of a new push higher in the stock or just another "dead cat bounce" that leads to another lower high.
On the daily chart we see that the breakout in AAPL stock from July and early August pushed it back above diagonal resistance as well as above its red 200-day moving average. All else being equal this was a constructive move, however considering the stock's series of lower highs since the 2015 top, in my eye some more confirmation is needed before the bulls could have their way again in a more meaningful fashion.
Following last week's new product announcements AAPL stock pulled back toward the previous diagonal resistance line and as well as toward its red 200-day moving average.On Monday the stock then promptly staged a bullish reversal by way of an outside day that firmly engulfed last Friday's daily candle. From this perspective, traders could now use Monday's lows as a stop-loss level for a bullish bet, i.e. a swing trade.
Management and risk description
While Monday did offer a bullish reversal on a daily closing basis, in the bigger sense I would still prefer to see a bullish reversal stick on a weekly closing basis.
Buy AAPL stock or the CFD at $105 or higher
: $110, as a first upside price target
: 1–3 weeks
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more