February 12, 2021 10:00
Apple’s share price has rallied nearly 100% higher since the beginning of 2020. However, this year has been tough for big tech companies such as the FAANG collective (Facebook, Apple, Amazon, Netflix, Google) which have all struggled to push higher.
Of course, the long-term uptrend in Apple’s share price is undeniable so trading against it needs caution. However, the monthly chart of the company’s share price below does show it is fairly overextended from the 20-period exponential moving average (blue line).
Source: Admiral Markets MetaTrader 5, #AAPL, Monthly – Data range: from Jul 1, 2006, to Feb 11, 2021, performed on Feb 11, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
However, the weekly chart below shows that buyers have struggled to stay above the $135.00 price level. In fact, this shows a triple-top chart pattern as the price is now below it after failing to break above it and continue to trend three times before. This could be seen as a bearish sign, or at least the lack of momentum to the upside.
Furthermore, the MACD oscillator is showing bearish divergence. This is when the price has made a higher high cycle but the MACD has not followed and makes a lower high. This suggests the recent move higher has been lacking momentum and some would take this is a bearish sign with the possibility of weakness ahead.
Source: Admiral Markets MetaTrader 5, #AAPL, Weekly – Data range: from Jun 4, 2017, to Feb 11, 2021, performed on Feb 11, 2021, at 8:35 pm GMT. Please note: Past performance is not a reliable indicator of future results.
If price did weaken, where could it go? The daily chart below shows a sideways range has developed in the stock price. A failed break to the upside, suggests the market could fall and test the other side of the range which is around the $106.00 price level.
This level marks the beginning of the recent higher high and higher low cycle upwards and would represent a near 30% correction in the stock price from the highs. To put that into perspective, the stock fell around 35% during the coronavirus pandemic so it may not repeat that unless there was a fundamental reason behind it.
Of course, most traders will be trying to stick with the trend and if price can stay above the horizontal resistance level of around $135.00, where the triple top has formed, then buyers may resume purchasing this much-loved stock!
Source: Admiral Markets MetaTrader 5, #AAPL, Daily – Data range: from Aug 5, 2019, to Feb 11, 2021, performed on Feb 11, 2021, at 8:40 pm GMT. Please note: Past performance is not a reliable indicator of future results.
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