Update on the Pesky Trading Range in Apple AAPL

Aug 3, 2010: 12:54 PM CST

I’ve received a few requests to update the chart of Apple (AAPL) which remains trapped within a multi-month sideways trading range.

Let’s take a look at the current daily chart and note the levels to watch for a breakout, along with trading strategies while price remains trapped in the range.

I last updated Apple (AAPL)’s chart on July 13th with the post:

“The Support Shelf and Trading Range to Watch in Apple AAPL”

… which remains true to this day as price continued to trade within that range and bounce off the ‘support shelf.’

What now?  Not much is different!

We still have key overhead resistance at $265, and a price breakout above $265 sends the upper target immediately to retest the 2010 high at $275 – a $10 potential quick play.

There are two main levels of price support to watch, and they come in at the $245 and $240 levels as indicated with horizontal lines.

There’s nothing complex to the analysis – there doesn’t need to be.  These are the levels that traders are watching (and trading) very closely, and a breakout through the upper resistance or down through lower support will certainly grab traders’ attention and positions.

However, while price remains “trapped” within the trading range between $245 and $265, the active trader can play “fade” trades or “range” trades within the context of a price test of the resistance at $265 and at the support at $245, placing a relatively close stop just beyond these levels in the event that price does break out.

In essence, if you’re putting on a trading position in Apple right now for anything longer than a day-trade, you’re essentially making a bet that price will hold these support or resistance levels and remain within the range (giving you profit if that’s true), or break out of the range, playing the breakout and range expansion move that will give you profit if price ejects from the range.

Monitor the price chart closely if trading within this range.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

1 Comment

One Response to “Update on the Pesky Trading Range in Apple AAPL”

  1. pipso Says:

    Hi Corey,
    Would you pls do some analysis on Cognizant Technology Solutions (CTSH) if you get time?