Chart Chatter: $AAPL

Welcome to Chart Chatter where we discuss various technical charts we find of interest. We cover indices, signals and stocks on different timeframes highlighting different technical techniques we use over time. We’ll focus on key observations we find relevant which readers may find of use for their own trading.

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$AAPL is up 30% on the year and has been in a steady up trend:

Recent new highs have come on a large negative weekly divergence. Such divergences have been the harbinger of sizable corrections in the stock to come.

These corrections can take months to produce downside pressure or they can come rather imminently. So far the stock is holding near the highs following a rejection at its upper trend line.

There is technical evidence that the stock will face major downside risk be it in 2018 still or in 2019. As $AAPL has risen sharply in 2018 it did so by leaving a number of sizable open gaps in its wake:

The most recent gap near 210/211 now forms confluence with the .236 fib off of its 2018 low. This area has to be viewed as confluence support on any further downside and may produce a further rally.

To have open gaps remain open for an extended period of time is not unusual. To have that many open gaps remain open indefinitely is unlikely.

Indeed we can observe that $AAPL had previously experienced a similar strong rally phase in 2012 only to see most gaps to eventually get filled over the course of the following year and a half:

As the previous chart also shows initial gap fills can serve as a rallying point, even producing new highs in the process. But it didn’t avoid the ultimate fate, and that is the filling of the lower gaps.

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