010519 Apple M 010519 Apple M 010519 Apple M

Technical Update - Apple breaking key support indicating further downside

Equities 2 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Apple share below key support at 129 could fuel selling pressure. 118 and 108 next levels to look out for


Apple has taken out its key support at 129. Despite being lifted back above the 129 support in what is probably the shortest Santa Clause rally in years Bulls could not hold it for long. Heavy selling yesterday pushed the share lower and now there is no support until around 118.
However, there could very well be more downside for Apple. 108-104 strong support area where Apple dips below the 200 weekly SMA seems likely.
Weekly RSI is below 40 i.e., showing negative sentiment and with no divergence indicating lower price levels are likely.


Apple d 4jan
Source all charts and data: Saxo Group

Medium- to longer-term Apple could drop lower. 107 is key. A close below 107 could fuel a massive sell-off.
Monthly chart shows that from April to August 2020 Apple experienced a fast massive surge also called the “fast area” from a share price around 82 and up to around 125 before a correction hit.
When a price enters that area on the way down it often moves just as fast down as it went up.

Monthly RSI has been showing divergence during the 2021 uptrend indicating the trend is not sustainable. Divergence must be traded out either by a new higher high on the instrument price or an RSI close below 40. If monthly RSI also closes below 40 the Strength Indicator will show negative sentiment on all time periods supporting the bearish picture

 
A close above 130 could see Apple bounce to around 140 but for Apple to reverse the bearish medium-term picture a close above 151 is needed.



Apple w 4jan
Apple m 4jan

 

RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

 

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