I thought that this chart was interesting during the current uncertainty in the market. So we have AAPL
, an undeniably strong stock over the last year. We see the break of the prior major resistance at approx. $100 and the major support level
at the $50-$55 range, over 100% gain over the last year. We see that there is a steeper trend channel over the last 4-6 months as compared to the more gradual overall trend channel in purple, usually indicating increasing demand, or a climax, it is almost impossible to predict. In reality, using Wyckoff is just like any other methodology, you go with the probabilities and the information you have. So what information do we have? 1) steeper trend channel = ? (usually strength), 2) support below price at the blue lines = strength, 3) confluence of support with the trend channel + blue support levels = strength, 4) up wave volume
> then down wave volume
= strength (current retracement at low covers approx 60% of prior up wave with only 30% of the volume
= no supply), 5) 2 leg pullback to trend channel on lower volume
= strength, 6) a break of the steeper yellow trendline
, followed by a test of the lows, could be a shakeout of the weak buyers (running the stops, AKA "Spring") so the smart money can buy at low prices (Re-accumulation, Wyckoff) before another rally to new highs, probably in the $125 - 130 range = strength.
So what worries me about this setup? Well the S&P
has been in a parabolic bull
cycle for over 2 years with hints of a buying climax recently. Plus, if the more gradual yellow trendline
doesn't get broken we could see a test of at least the major (blue) support levels at about $100, with potential further testing of the broader (purple) trend channel at the $90-95 range.
In conclusion, I think ultimately we move higher, but would like to see a further test deeper into the broader (purple) channel. But I would hate to miss this move, so I think a 1/3 to 1/2 position entry now on the test of the shakeout ("Spring") is a good probe entry, planning to enter with rest of position if the pullback goes to the purple trend channel (assuming the outlook remains the same). With initial stop below the purple trend channel/swing low after a higher high/higher low prints. Target at around $125-130.
Added note: just saw this, the chart is showing a classic "cup and handle" pattern with rather large base over 1 year in length. If this is the case than we could see a potential measured move from the 2009
lows as high as the $145 level.