Technical Update - Top and reversal pattern in Apple indicates down trend
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Apple could be set for a larger downturn. After a strong bounce from mid-June till mid-August it formed a Gravestone Doji mid-August on the weekly chart.
(Gravestone Doji is where open and close is almost at the same price and with a large upper shadow and no lower shadow).
But more importantly, it was a Doji that is a part of a Doji Evening pattern (circled) which is a strong indication of top and reversal. Power shifted from buyers to sellers and Apple was hit by sell-offs.
Weekly RSI is still showing positive sentiment and no divergence, however indicating higher levels but a share price close below 150.80 is to jeopardize that scenario.
However, daily RSI is showing negative sentiment supporting the bearish picture, and if RSI closes below 40 threshold the bearish picture is confirmed. If Apple breaks below 152.60 it is likely to fuel further sell-off. A close below support at 150.80 will further add top the bearish picture that could take Apple down to June lows around 130. Some support around 142.
If June lows are taken out there is no strong support before around 109-104.
To reverse this bearish outlook Apple needs to close above the 176.15. If closing above 164.26 Apple share is in neutral and could move to test the 176.15 peak (peak of the Gravestone Doji)
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