A TSC member request came through for an update on Apple (AAPL). My previous update was written right before Apple’s latest earnings report and was titled “7/21/2017 – Apple (AAPL) & Its Upcoming Earnings“. Since that update, there have been some warning signals for Apple’s uptrend that have developed.

In my July update, I had discuss various support levels below Apple’s share price at that time. Apple barely dropped into my preferred purchase area / support zone after the article. However, some of those pullback areas are still in play during the current pullback. The current pullback just took a little longer than I anticipated before it started to develop. Let’s see how Apple’s pullback looks on its candlestick charts.

But before jumping right to the candlestick charts as I normally do, I want to take a peek at AAPL’s P&F Charts first.

Warning Signals for Apple’s Uptrend?

I want to start out with the Point & Figure charts for Apple (AAPL). The high/low and the closing charts have 2 wildly different price objectives.

The High/Low Point & Figure chart for Apple (AAPL) suggests a bearish price objective of $139.

High/Low P&F Chart

The Closing P&F Chart suggests a bullish price objective of $169.

Closing P&F Chart

 

How can 2 wildly different price objectives both be valid? Well, I will have to illustrate that from an Elliott Wave perspective in order to do that.

AAPL – Bearish Engulfing Candlesticks

Bearish Engulfing candlestick patterns are bearish reversal candlesticks. This next [s2If !current_user_can(access_s2member_level1)]……

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I review some bearish items I see developing on Apple’s longer-term charts. But then I also provide support areas that can be used to buy the dips, especially the current dip for its share price.

If you are not a Trendy Stock Charts member, consider joining today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)]5 year monthly candlestick chart may clue be providing clues that its uptrend is over or nearly over. There was a Bearish Engulfing candlestick pattern that developed in June 2017. And there could be another one developing this month for September 2017. It could also for a Dark Cloud Cover candlestick pattern. Both patterns are bearish reversal candlestick patterns.

Remember that when you start seeing multiple bearish reversal candlestick patterns develop around the same price level, it is usually an indication for an upcoming consolidation. Neither of the recent two candlesticks were confirmed by selling volume greater than the previous months volume. September has one week of trading left and very well end up with selling volume greater than the total volume for August 2017.

Let’s now see if the Elliott Wave analysis agrees with the candlestick assessment.

AAPL – Elliott Wave Perspective

Based on the candlestick patterns, we can set expectations that AAPL’s uptrend is nearly over or over for the time being. Let’s see if that makes sense from an Elliott Wave perspective.

This is a 5 year weekly chart for Apple (AAPL) from an Elliott Wave perspective. I switched over from a monthly to a weekly chart in order to see the breakdown of the waves a little better. It is very important to see the breakdown in order to know the area where the next pullback should stop and find support.

Is Wave 5 in process still or has a corrective Wave A begun? Typically, Wave 5 is either the same length as Wave 1 or Wave 3. It is shorter than both lengths from those waves right now. Wave 1 developed over a 6 month time frame and is approximately $29 long. The current Wave 5 has developed over 3 months so far and is only $22.50 long. So it would appear that Wave 5 has at least a little more upside to be somewhat symmetrical with Wave 1. But it is pretty close already.

Share Price Support & Reversal Areas

During the current pullback I’ve identified the 2 most likely reversal areas.

• The $147 support area is the top of a Wave 1 within the Wave 5 pattern illustrated
• The $137 support area is the bottom of Wave 4 within the Wave 3 pattern illustrated

If you are not familiar with how Elliott Waves develop in different scales of degree, maybe this page explaining “the trend of 1 larger degree” will help. I discuss how wave patterns can start building off oneself and create a similar wave pattern but on a larger degree.

If you want to be long shares of Apple again, then purchase shares within the $137 – $147 zone whenever AAPL’s share price enters it. Monitoring its share price on a daily chart for bullish reversal signals within that range will help to provide the best entry price to go long again. Or just stop by the Idea Chamber and ask as its developing along…

Warning Signals for Apple’s Uptrend – Summary

Do not ignore the warning signals for Apple’s uptrend. This current downtrend Apple’s share price finds itself in could be consolidating Waves 1-5 of a Bullish Impulse wave pattern. If Wave 5 is not yet complete, which I do not yet think it is, then expect AAPL’s share price to find support at the $147 price level.  However if Wave 5 is complete, then AAPL’s consolidation could be up to 6 months long. Therefore, have at least a little patience when AAPL pulls back into the preferred purchase area.

For traders and investors, the $147 level should be used as an initial scale-in purchase area to go long again. Any continued pullback to the $137 price level and a 2nd scale-in purchase should be made. Apple should find strong support around the $137 price area. This was the price level of its previous high 2 years ago. That previous resistance area should now offer strong support.

Any repurchased shares should be sold when AAPL attempts to challenge its all-time high again. Currently, the $170 area looks to be the top of a Wave 5 pattern assuming that Wave 5 is not yet complete, which I do not think it is. Reaching the $170 price level most likely involves a good earnings report next month. But that earnings report is currently setting up as a sell the news event.

While there are always “chances” a stock could do this or could do that, I always try to lay out the most probable scenario I see developing on any chart.

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