AAPL Update: Log Chart Reveals Key Levels and Clues
Updated
Primary Chart: Parallel Channel Defining Downtrend from All-Time High, Uptrend Line from Covid Lows Through June 2022 Low, Fibonacci Levels
AAPL's logarithmic chart reveals some interesting technical facts that are not as apparent on a linear / arithmetic chart.
1. AAPL remains in a trading range. This range developed and persisted over the past month. The top of the range is about $157 and the bottom of the range is about $134 (lows on October 13, 2022). The breakout of this range may determine the next multi-week trend leg in AAPL.
Supplementary Chart: 65m Chart Showing Chop Range for AAPL over Past Month
2. Uptrend Line from March 2020 through June 2022. First, consider the uptrend line (light blue) from the Covid 2020 lows that connects through the June 2022 low. On October 12, 2022, SquishTrade discussed this trendline, showing it on both linear and logarithmic charts. This TL formed the lower boundary of a very large multi-month triangle. SquishTrade's previous AAPL post forecasted whipsaws around this trendline stating on October 12, 2022 as follows:
"But when multi-month triangles like this break, and when multi-year trendlines like this break, it should be expected this could be a process rather than a quick event, assuming the trendline is valid. In part, this is because multi-year trendlines and multi-month triangles do not break and dissipate easily. The lower trendline of the triangle pattern is a multi-year trendline from the Covid lows to the present. Price does not always just break right through such an important level. On occasion, it can slice right through a level deemed consequential and long-term. But often when encountering a very important longer-term level, price can tag it, then break it repeatedly in both directions, whipsawing above and below the line a few times before following the ultimate direction it will take. Or it can break the line and then retest it from underneath a couple times as well."
On the Primary Chart for October 12, 2022, SquishTrade stated: "watch for a retest or whipsaw moves around this line."
The expected whipsaw has occurred to an even greater degree than was expected. Notice on today's Primary Chart the black line showing seven breakouts above and below the line. Price has been whipsawing back and forth around this TL for more than four weeks (since September 29, 2022).
On the log chart, price seems to be making progress, however, back to the downside. But with the long lower wick on the candle for November 4, 2022, one might expect yet another retest or whipsaw before moving lower. If AAPL were to retest this TL, the retest would be at approximately 152.70 if it were to occur next week—the line slopes, so the retest resistance level increases with each day that passes.
3. Major Support and Target Areas in the $128-$131 range. The immediate support zone arises at the base of the parallel channel, currently at $130-$131. The VWAP anchored to the 2020 low lies around $128.03 over the next few days. SquishTrade forecasts that AAPL will reach $128-$131 within the coming weeks or couple months though this will not likely happen in a straight line given the choppy price action in both AAPL and equity indices like SPX and NDX. This $128-131 level shows confluence with the YTD price low at $129.04 as well as a key Fibonacci level at $133.
4. Major Support and Target Areas in the $114 to $122 range. If this $128-131 target is reached and violated to the downside, then further downside targets will be considered as viable and effective. The next lower targets are (i) a Fiboancci projection at $122.25, (ii) a long-term Fibonacci retracement at $118.02 (.50 Fib retracement of the 2020-2022 rally on a linear chart), and (iii) another key Fibonacci retracement at $114.07 (.382 Fibonacci retracement of 2020-2022 rally on a logarithmic chart). This area should be considered as a significant support / target zone from $114 to $122.
AAPL's logarithmic chart reveals some interesting technical facts that are not as apparent on a linear / arithmetic chart.
1. AAPL remains in a trading range. This range developed and persisted over the past month. The top of the range is about $157 and the bottom of the range is about $134 (lows on October 13, 2022). The breakout of this range may determine the next multi-week trend leg in AAPL.
Supplementary Chart: 65m Chart Showing Chop Range for AAPL over Past Month
2. Uptrend Line from March 2020 through June 2022. First, consider the uptrend line (light blue) from the Covid 2020 lows that connects through the June 2022 low. On October 12, 2022, SquishTrade discussed this trendline, showing it on both linear and logarithmic charts. This TL formed the lower boundary of a very large multi-month triangle. SquishTrade's previous AAPL post forecasted whipsaws around this trendline stating on October 12, 2022 as follows:
"But when multi-month triangles like this break, and when multi-year trendlines like this break, it should be expected this could be a process rather than a quick event, assuming the trendline is valid. In part, this is because multi-year trendlines and multi-month triangles do not break and dissipate easily. The lower trendline of the triangle pattern is a multi-year trendline from the Covid lows to the present. Price does not always just break right through such an important level. On occasion, it can slice right through a level deemed consequential and long-term. But often when encountering a very important longer-term level, price can tag it, then break it repeatedly in both directions, whipsawing above and below the line a few times before following the ultimate direction it will take. Or it can break the line and then retest it from underneath a couple times as well."
On the Primary Chart for October 12, 2022, SquishTrade stated: "watch for a retest or whipsaw moves around this line."
The expected whipsaw has occurred to an even greater degree than was expected. Notice on today's Primary Chart the black line showing seven breakouts above and below the line. Price has been whipsawing back and forth around this TL for more than four weeks (since September 29, 2022).
On the log chart, price seems to be making progress, however, back to the downside. But with the long lower wick on the candle for November 4, 2022, one might expect yet another retest or whipsaw before moving lower. If AAPL were to retest this TL, the retest would be at approximately 152.70 if it were to occur next week—the line slopes, so the retest resistance level increases with each day that passes.
3. Major Support and Target Areas in the $128-$131 range. The immediate support zone arises at the base of the parallel channel, currently at $130-$131. The VWAP anchored to the 2020 low lies around $128.03 over the next few days. SquishTrade forecasts that AAPL will reach $128-$131 within the coming weeks or couple months though this will not likely happen in a straight line given the choppy price action in both AAPL and equity indices like SPX and NDX. This $128-131 level shows confluence with the YTD price low at $129.04 as well as a key Fibonacci level at $133.
4. Major Support and Target Areas in the $114 to $122 range. If this $128-131 target is reached and violated to the downside, then further downside targets will be considered as viable and effective. The next lower targets are (i) a Fiboancci projection at $122.25, (ii) a long-term Fibonacci retracement at $118.02 (.50 Fib retracement of the 2020-2022 rally on a linear chart), and (iii) another key Fibonacci retracement at $114.07 (.382 Fibonacci retracement of 2020-2022 rally on a logarithmic chart). This area should be considered as a significant support / target zone from $114 to $122.
Note
Look at the confluence of VWAPs at major turning points this year. The YTD low VWAP and the August 17, 2022 VWAP both coincide at $150-$151. This should remain very critical resistance for now.In addition, the following chart is a linear rather than logarithmic chart. This shows that both can be relevant. Look at where price stalled and failed at resistance last week—right at the TL from the 2020 Covid lows through the June 2022 low except this one is shown on a linear (rather than logarithmic) chart!
Note
A few clarifications:The black arrow on the Primary Chart (showing a price path) is purely hypothetical and intended solely to illustrate the chop that has taken place and likely to continue this week until CPI or some other major event dictates the next trend move. It was also meant to suggest that AAPL likely could pressure bears a bit more and push higher (especially given VIX weakness last week and this week), or potentially even retest the key up TL (forming the triangle's lower edge), though this retest does not have to happen. The lower wick on November 4 also pointed toward some upward price movement this week before CPI.
The main point of this analysis, however, is to focus on the downside that should come eventually, pointing to both conservative and aggressive downside targets considered after this consolidative phase completes.
Note
With a +6.2% rally today post CPI data, AAPL could rally over the coming week to $148-$150. Squish will be watching the blue trendline (light blue) from the Covid 2020 lows that connects through the June 2022 low: this upward TL should be monitored as major resistance for this rally should it push to extremes. That trendline appears to provide strong resistance at $152.70. Well, the high from 10/28 should also be considered as major structural resistance too for now ($157).Markets are volatile and highly uncertain. Very little is guaranteed. Trade cautiously (or not at all) unless your strategies are working well in this volatile market.
ST is taking this chart (as others) level by level. The broader picture remains bearish. But the shorter time frames have (obviously) turned very bullish as as been typical in this bear, where markets can rip on the slightest bit of "less bad" news.
With AAPL taking out the high from November 8, AAPL is showing that this corrective retracement can push a higher:
Note
SquishTrade reiterates one key point made in the original post above:"1. AAPL remains in a trading range. This range developed and persisted over the past month. The top of the range is about $157 and the bottom of the range is about $134 (lows on October 13, 2022). The breakout of this range may determine the next multi-week trend leg in AAPL ."
So despite being bearish based on macro views and longer-term trends in all equity indices and crypto, price action remains king and rallies must be respected until they fail. For AAPL, on larger time frames, nothing has changed, and AAPL remains trapped in this range b/w $130-$157
Note
AAPL may be nearing the time when it reverses back lower. Today (11/15/22), AAPL touched the light blue long-term TL (shown on the Primary Chart from 10 days ago and also shown below). It failed right at that line. See chart below, showing the same TL with today's price bar / candle reacting lower once reaching it.To reiterate, this is the uptrend line (light blue) from the Covid 2020 lows that connects through the June 2022 low. On October 12, 2022, ST discussed this trendline. This TL was again emphasized in this current post dated Nov. 5, 2022, when AAPL closed at $138.38. This TL over the summer formed the lower boundary of a very large multi-month triangle that was broken, but price has whipsawed around it at least 7 times as discussed above.
Is this the final whipsaw? ST suspects price may actually whipsaw above this TL. A breakout above this TL that fails decisively = bearish signal and prices should return to $128-$130, and even lower PTs potentially.
Note
Since touching the long-term upward trendline (light blue) around 152-153 on November 15, AAPL's price has reacted lower. But price action remains choppy. It's tough to tell at this point whether AAPL has begun the next leg lower or whether it will return for one more test of the long-term TL, which would now be around $155, a bit higher than it was on November 15 given its upward slope.Bottom line: AAPL's price remains choppy and still within the range identified in the initial post above: $134-$157. Bears and bulls may continue to get chopped up until the next leg begins in earnest. Though AAPL can peak at any time (and may already have at the upward TL), who could genuinely be surprised by another move higher to whipsaw around the key TL one more time? At the time of the initial post, price had done about seven whipsaws around this line. And on November 15, price tagged and briefly moved above it once more. Would another time be all that surprising?
Note
AAPL's price action continues to confound bulls and bears alike. It remains stuck within the trading range identified in the original post in early November 2022: $134-$157. The uptrend line (light blue) from Covid lows through the June low has been a source of both support and resistance with about 8 whipsaws above and below it over the past 2 months. The last time it was touched was a couple weeks ago when the blue up TL worked as resistance stopping AAPL's multi-day rally on Nov. 15.
AAPL is in an interesting spot. And SPX and NDX are as well. Rallies have run right up to major resistance. People are turning bullish just as many turned very bearish at the lows in mid-October 2022.
Part of the uncertainty in major indices like SPX and NDX comes down to AAPL. Which way will it break when it breaks out of this range? SquishTrade is hesitant to call a bearish or bullish move for a multi-week move given this uncertainty in AAPL.
SPX has rallied up to major resistance. But without any major catalysts before the FOMC meeting in mid-December 2022, it would seem that price can remain supported across indices, and perhaps even push a bit higher. Sorry for the lack of certainty, but remember—we can't impose certainty and trades on markets. Markets will do what they want, when they want. When they want to chop, break long-term TLs just for fun for a few days, they will do so.
Note
Although it's been choppier than one would like, AAPL has made excellent progress toward the first target zone from this November 5, 2022 post. Price has tracked the hypothetical price path better than ST could have expected. The main point was to show that price would whipsaw within the range and test the upper and lower edges of it. That has played out!
Now the final targets remain to be reached.
Note
Final update before the weekend. SquishTrade has been watching this intraday triangle on AAPL. It broke this week. But price has stopped right at the prior lows from October 13 and November 4 (blue line). Longer-term targets are much lower than $133-$134, but this was the first target zone (see original post above).A bounce makes sense here for a number of reasons. Quad-witching OPEX was today with over $4 trillion in notional value expiring. Given the downward move and dealers' need to hedge on the way down, those hedges must be unwound in the days to come. So AAPL, SPX and other stocks may see a bounce next week. Some further short-term weakness could occur, but a bounce seems in the cards.
Don't recommend playing a bounce unless you're very nimble. When a severe decline occurs as happened this week (SPX 4100 to near $3800), bounces can be feeble and fail suddenly.
Note
Check out the black VWAP from the June 17 low, which is the current YTD low. The rally from June lows to August highs stayed well above it. But after price crashed back below it into the October low, that VWAP has kept a lid on rallies! It's interesting how well it has worked especially in November and December, where it has worked almost as well as a trendline. This was adding to the bear case, though it wasn't discussed much in recent AAPL posts.The June VWAP has been a ceiling, and daily and weekly moves above it quickly exhausted and failed. Just wanted to point that out. This suggests the potential for more weakness in AAPL, and given its importance in SPX and NDX, the broader markets into 1H 2023.
Daily Chart - key VWAP in black
Weekly Chart - key VWAP in black
Note
AAPL further confirmed the bearish case on Friday 12/16/22 and today 12/19/22. AAPL undercut lows going back to June 30. That is about six months of lows. Many lows, including October 13 low, and other lows in the past two months have stopped around $134.37 to $134.58. The last two trading sessions changed that with an intraday low of $131.32 today.Trade closed: target reached
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