Updating Apple AAPL Inflection and EMA Levels

Jan 10, 2013: 2:37 PM CST

After some volatile action, Apple (AAPL) prices have settled within a short-term trading range or descending triangle pattern.

Specifically, prices have bounced between a key support level and falling daily EMAs.

Let’s update our current Apple charts and note these short-term levels along with the Weekly Chart Fibonacci and potential targets should Apple break free from this range soon.

In our last update, I highlighted the EMA Compression and potential breakout levels from the late November 2012 push between the 20 and 50 EMA.  Price stalled and reversed from the 50 EMA to retest the $500 key support level.

From there, price traded between the falling 50 day EMA and the horizontal $500 support line which leads us to our current compression level.

The key focal point on the Daily Chart – from a resistance standpoint – would be the $550 confluence of the falling 50d EMA, January swing high, and the upper Bollinger Band.  Keep this in mind as you study the weekly chart below.

The key chart-based support level is the $500 ‘triple reversal candle’ bottom that has held (so far) from November to January.

While short-term traders can play price movement towards or away from these levels during the compression phase, other traders may decide to wait for a breakout from the current consolidation boundaries before putting on a new position.

A bullish breakthrough would likely trigger on a clean breakthrough above $550 while a bearish breakdown would trigger on a clean break – and close – under $500.

Let’s raise our perspective to the Weekly Chart to confirm these levels and note potential upside and downside breakout targets.

I drew two classic Fibonacci grids as labeled from the August 2010 swing low and the June 2011 swing low to the September 2012 high into $701 per share.

The purpose here is to find potential confluences or overlap in the Fibonacci levels.

In terms of the Fibonacci grid, price has recently been consolidating between the 38.2% level of the larger grid and the 50% retracement of the short-term grid.

Price found resistance into the 38.2% level of the short-term grid into $550.

I mentioned the $550 level on the Daily Chart, and we can see from the Weekly Chart that we have two more indicators to align at this level:  The falling 50 week EMA and the 38.2% short-term Fiboncci grid from 2011.

What levels are important from the Weekly Chart?

Once again we note the $500 support confluence and any breakdown here could lead to a sell-swing toward the loose Fibonacci confluence near the $460 per share level.

An upside breakthrough above $550 would clear the confluence resistance barrier and could suggest a continuation at least to $600, and a breakthrough above $600 would be a clear bullish reversal (late) confirmation signal.

Once again, short-term traders can play between the $500 and compressing $550 boundary (though watch the immediate 20d EMA at $530 first) while others can wait for a breakout above $550 or beneath $500 to try for a breakout play toward the weekly chart Fibonacci levels.

Be safe and monitor real-time developments with these key pivot levels on the Daily and Weekly Charts.

Corey Rosenbloom, CMT
Afraid to Trade.com

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3 Comments

3 Responses to “Updating Apple AAPL Inflection and EMA Levels”

  1. zstock7 Says:

    bought feb calls yesterday. 1-23 reports. figure AAPL will be above its 200 day on earnings.

  2. zstock7 Says:

    should be a decent earnings season. 1505 spx is possible, imo.

  3. Brad Vogel Says:

    Week of January 28 2013

    I can see the SPY getting to 152 but not to 155 without some at least
    20-40 point correction on the SP500 using 1480 as first support line for
    a buying opportunity. I know every news station is talking 1550-1600
    they are the same fools who said Apple would go to $800-$1000 when it
    was pushing towards $700.

    If you are long do not be greedy make
    sure your stops are tight or just take some off the table. It would
    good to protect yourself by buying a few puts as for cheap insurance
    policy.