Apple Rises After Jerome Powell Wraps Up Testimony: Will The iStock Negate Technical Pattern?

Apple, Inc AAPL was edging higher on Thursday in tandem with the S&P 500. The move comes following two days of testimony by Jerome Powell, where the Federal Reserve chair took a hawkish stance in front of House and Senate committees, warning that stubbornly high inflation could impact how high and how many more times the central bank will need to hike interest rates.

Powell said the Fed will need to take “into account the totality of incoming data" to make its decisions. Positive news for the stock market came on Thursday morning when the Labor Department released data showing initial jobless claims increased by 21,000 to 211,000 last week.

The news caused Apple to break up bullishly from an inside bar pattern. An inside bar pattern indicates a period of consolidation and is usually followed by a continuation move in the direction of the trend.

An inside bar pattern has more validity on larger time frames (four-hour chart or larger). The pattern has a minimum of two candlesticks and consists of a mother bar (the first candlestick in the pattern) followed by one or more subsequent candles. The subsequent candle(s) must be completely inside the range of the mother bar and each is called an "inside bar."

A double or triple inside bar can be more powerful than a single inside bar. After the break of an inside bar pattern, traders want to watch for high volume for confirmation the pattern was recognized.

• Bullish traders will want to search for inside bar patterns on stocks that are in an uptrend. Some traders may take a position during the inside bar prior to the break, while other aggressive traders will take a position after the break of the pattern.
• For bearish traders, finding an inside bar pattern on a stock that's in a downtrend will be key. Like bullish traders, bears have two options of where to take a position to play the break of the pattern. For bearish traders, the pattern is invalidated if the stock rises above the highest range of the mother candle.

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The Apple Chart: Breaking up from the mother bar was the most likely scenario because Apple was trading higher before forming the inside bar pattern. Thursday’s move higher was coming on lower-than-average volume, however, which suggests the bulls are weak, which may cause concern for bullish swing traders.

• Apple’s drop on Tuesday confirmed the stock is trading in an uptrend pattern. Apple’s most recent higher high was formed on Monday at $156.30 and the higher low was printed at the $151.13 mark.
• On Thursday, Apple was working to print a doji candlestick, which could indicate a retracement to the downside is in the cards for Friday. If that occurs, Thursday’s high-of-day will mark a lower high, which will negate the uptrend, although a downtrend won’t be confirmed unless Apple prints a lower low.
• If Apple is able to remain trading above the 200-day simple moving average (SMA), which the stock crossed above on Feb. 2, the 50-day SMA will eventually cross above the 200-day, which will cause a golden cross to form. If that happens, a longer-term bull cycle could be in the cards.
• Apple has resistance above at $153.92 and $158.09 and support below at $150 and $146.41.

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