Key Daily and Weekly Pivot Price Apple AAPL Traders Should be Watching

Apr 11, 2011: 11:29 AM CST

Popular stock Apple (AAPL) now faces a key “make or break” confluence level on both the daily and weekly chart that traders will find very interesting.

Let’s start with the weekly chart and drill-down to find the important confluence level and thus the “IF/THEN” trading set-ups that are likely to come into play.

Cutting right to the point, the key weekly level right now is the rising 20 week EMA poised at $333.50.

You can see from the chart that the rising 20w EMA has been the bottom/end of retracement swings down in the context of the powerful rising price trend.  It’s possible the current test of the 20 EMA will hold support this time as well.

If not, then the next lower level to expect support will be the confluence at $300 – setting up a bearish ‘scalp’ to test $300 if we see a sudden breakdown soon under $330.

That’s easy enough – so the weekly “IF/THEN” becomes:

“IF the 20w EMA holds as support at the $330 level THEN expect a rally up to $360 to see if buyers can test or break-through the high.”

or “IF sellers push price under the 20w EMA at $330, THEN expect a sell-off to find support at the $300 level.”

The daily chart gives a better picture of these statements:

Again, going for the simple observations, the Daily Chart shows us the “Floor” of support between $325 and $330 as shown.

In a stock as volatile as Apple, it’s best to think of support and resistance as floors rather than perfect price points that trigger an automatic shift in position if broken.

Anyway, the Daily Chart shows a potential Descending Triangle (which is not necessarily bearish) with boundaries at $325/$330 and then a falling upper trendline at the $350 region.

That allows us to modify our Weekly “IF/THEN” logic to the following:

“IF above $330, THEN the chart is bullish and a breakout above the falling trendline at $350 is further confirmation of the bullish picture and bounce off support, which will likely lead to a retest of $365 or perhaps a continuation of the breakout.”

That’s a lot of words to say:  “We’re in the bullish camp expecting breakouts and trend continuation as long as we’re above $330.”

And of course “IF sellers breakdown through the confluence support at $330, we’re likely to see $300 again which happens to be the rising 200 day SMA.”

I like to draw green highlights above triggers to upside targets and of course red highlights under support triggers to lower targets – it helps simplify the chart.

For those of you who love Fibonacci analysis – going a little bit beyond basic charting as above – we have an interesting Fibonacci short-term confluence that just happens to converge at $331:

Without going into too much detail, I drew two small Fibonacci Retracement grids from the $275 swing low (blue)  and the $297 level (green) as shown – both to the $363 pivot high in February.

What’s most important – and should leap off the chart at you – is the dual confluence band at $331 (the 38.2% of the blue grid and 50% of the green grid).

It just means traders seem to be respecting the $330 level which forms a confluence with prior price levels and the 20 week EMA.

Thus, it’s a level you should be watching very closely.

It would be profoundly significant if sellers busted under the confluence levels – opening the door for a fall to $300.

Anything except a firm fall under $330 and we would expect the rising uptrend to continue.

Corey Rosenbloom, CMT
Afraid to Trade.com

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3 Comments

3 Responses to “Key Daily and Weekly Pivot Price Apple AAPL Traders Should be Watching”

  1. Terlyn12001 Says:

    This is the same shape as gold and silver in early March. Ended up being a pullback.

  2. Tprovan Says:

    I noticed the $tick did not seem to work on apple or the spy today
    9:50 new high tick new high price and price rolled over?

  3. Corey Rosenbloom, CMT Says:

    Compare TICK relative to yesterday's range and price action, and extreme values relative to current environment. In other words, a TICK high today at 681 cannot be seen as bullish in any way, and the morning rally in price was not confirmed in TICK – namely TICK didn't get above yesterday's end-of-day levels when price was lower. So, price this morning was higher than yesterday into the close, TICK this morning was lower than yesterday into the close, TICK high at 681. All that's bearish nonconfirmation and the market rolled to the downside for the remainder of the session. Nothing's perfect but this was a situation where the TICK worked in terms of non-confirmations forecasting future intraday weakness.