By Andrew Nyquist
A couple weeks ago, I posted a multi-year monthly bar chart of Apple (AAPL) that highlighted the importance of the 20 month moving average as a key AAPL technical support. That level (just under $500) has held thus far, which has me cautiously optimistic that a pattern similar to early 2008 may be playing out. See: Apple Long Term Monthly Chart Analysis
In full disclosure, I have traded Apple’s stock a few times of late. And I currently have a small trading position on (1/4 size that I initiated Friday at $530). My trading plan for AAPL on this go-around is quite simple and confined to the structure of the technical setup in the chart below.
Although a bit disorderly, the stock has formed a basing-like platform. Within the platform, the candlestick toggle zone around $520 (+/- $3) highlights the most important near-term AAPL technical support level. The importance of this area is underscored by the convergence with the initial downtrend live angle. With this in mind, I plan to add a 1/4 position size into $520, while setting a mental stop on an intraday move below $517. With averaging, this would minimize my risk to less than 2% on a 1/2 size position (assuming I am able to buy again near $520).
On the upside, Apple stock could look to retest the downtrend line (around $550 and falling). A move through the downtrend line would offer another area to add to positions with targets residing overhead at $555 (Wednesday’s opening range high), followed by the open gap around $570.
Note, though, that trading AAPL doesn’t come without risk. With earnings around the corner, the stock is likely to see increased volatility. And as with any trade, the key to success lies with your entry point(s) and it’s proximity to your potential exits. The better the entry point(s), the less risk, and the more potential reward. And if it doesn’t work out, step back, re-evaluate, and wait for another low risk setup.
Trade safe, trade disciplined.
Apple (AAPL) stock chart with trend lines and technical analysis. Key AAPL technical support levels and tenuous basing structure.
Position in AAPL at the time of publication.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.