The Rectangle Range Continues for Apple AAPL Trade Planning

Oct 22, 2014: 10:17 AM CST

After a mini-bear trap, Apple (AAPL) shares continued trading within a well-defined Rectangle Range Pattern.

Let’s update our Apple chart and note potential breakout trades – or “Range Fades” – that may trigger soon.

After a breakout (gap) into trend movement from May to August, shares have traded within a triangle and now rectangle price pattern on the Daily Chart.

To simplify the chart, Apple shares trade between resistance into $103.00 per share and support at $95.00 per share.

This defines our current short-term trading strategies for Apple.

We’re currently monitoring the $103.00 resistance level for a potential breakout and pro-trend (bullish) continuation trade opportunity as price moves up away from this area.

However, we’re balancing the odds of yet another “fade” or failure to breakout, which allows for an aggressive short-sell trade into resistance (with a stop beyond the $103.50 or $104.00 level).

In the “alternate” thesis event that price does turn, but turns too sharply and continues with a breakout under $95.00’s support level, it would lead to a potential breakdown play toward the $90.00 support cluster.

Here’s the picture taking shape on the Weekly Chart:

Note that $95.00 per share also provides a floor of support from the rising 20 week EMA ($96.77).

In the event that Apple shares do break through the $103 and then $105 level, it could lead to yet another pro-trend continuation trade opportunity (bullish above $105).

We see a lengthy sideways Triangle pattern that developed into early 2014 where price broke strongly above it to continue the bullish impulse from the 2013 low.

The prior high from 2012 (which actually was $700 per share before the split) aligns with $100 per share – the midpoint of the current range.

Do note the negative weekly momentum divergence which is a slight concern for buyers at the moment (unless we see a sudden bullish breakout which would override the divergence caution signal).

Continue monitoring price with current levels inside the Rectangle Range Pattern.

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Corey Rosenbloom, CMT
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