Bull Trap Down to Support in Apple AAPL Trade Planning

May 1, 2015: 11:45 AM CST

Apple (AAPL), just like the broader S&P 500, snapped a Bull Trap on a failed breakout which collapsed price rapidly toward a key support target level.

Let’s update our Apple chart and highlight the critical “Make or Break” support level after the trap.

Apple’s trend remains up (bullish) yet price retraced powerfully down toward a key price level from which we can plan (or manage) a trade.

Buyers failed to boost the price above the $135.00 per share level and a large Bearish Engulfing Candle sent price straight down toward the $125 confluence support level.

Take a quick moment to review three similar posts on the S&P 500 and Gold Bull Trap this week:

“A Hideous Bull Trap Snaps Gold Traders”

“Level Planning after the Bull Trap in the S&P 500 (recognizing and avoiding)”

Bearish Engulfing Candle at the Highs and S&P 500 Planning

Apple (AAPL) followed in their footsteps, trapping traders at the highs.

Study the chart-based factors that often precede traps and discover how to protect yourself from being bullish on a breakout that is more likely to fail than succeed.

Hint:  Divergences often suggest a failed breakout.

With the Daily Chart perspective above, note the confluence support into the current $125 per share level.

It starts with the 50 day EMA pivot along with a trendline and prior price lows.

We can see the perspective clearer on the intraday chart:

A pure-price breakout highlights the short-term triangle and initial breakout beyond the $128.00 level in late April.

Do note the reduced volume, or at least the lack of a bullish corresponding surge in volume as price crested higher away from $129.

On the gap of April 27th, Apple experienced high intraday volatility and the stability collapsed, trapping traders at the highs as price returned not only to fill the morning gap, but back toward the breakout zone of $128.00.

While Apple closed into the $128.00 breakout level on April 29th, the next day saw a downside opening gap and powerful (logical) trend day lower that returned the price all the way to the lower trendline and 50 day EMA.

At this point, we’re seeing a bounce up off this level and will reference the current $125.00 level as the critical bull/bear short-term pivot.

Apple shares would be short-term bearish (reference the Daily Chart) if price departs further under $125, opening traders up to a further liquidation event.

Otherwise, we’ll reference a movement up away from $125.00 as a green zone bullish short-term support play.

Apple would resume bullish breakout expectations if price trades back above $129.00.

Focus on these levels and incorporate them into your current trading strategies and positions.

Here are a few additional recent posts on Apple (AAPL):

Apple at Key Trading Point after Dow Jones News

Nine Stocks Breaking Strongly to New Highs Today” (what is strong often gets stronger)

Apple Gives us a Lesson in Buying Strong Stocks at New Highs

“A Flag and Planning the Next Swing in Apple

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Corey Rosenbloom, CMT
Afraid to Trade.com

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1 Comment

One Response to “Bull Trap Down to Support in Apple AAPL Trade Planning”

  1. Robin Says:

    We need to be very careful, it might look all easy and simple, but in reality it’s a very tough situation and if we don’t plan properly or well then we can go into serious issue. I am working with OctaFX broker, it helps me a lot with their swap free account, it’s really useful because I am not required to pay anything for keeping my trade on overnight, so this give me ideal scenario to be doing long term trading.