Apple Climbs Higher In Channel Pattern: Is The Stock Headed For Blue Skies?

Apple, Inc AAPL was trading about 0.9% higher on Friday, with continued momentum after bouncing up from the bottom trend line of a rising channel pattern on Wednesday.

The bounce up from the trend line also caused Apple to form a double bottom pattern near the $170 mark.

A double bottom pattern is a reversal indicator that shows a stock has dropped to a key support level, rebounded, back tested the level as support and is likely to rebound again. It's also possible the stock may retest the level as support additional times, creating a triple bottom or even quadruple bottom pattern.

The formation is always identified after a security has dropped in price and is at the bottom of a downtrend whereas a bearish double-top pattern is always found in an uptrend. A spike in volume confirms the double bottom pattern was recognized, and subsequent increasing volume may indicate the stock will reverse into an uptrend.

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The Apple Chart: Apple has been trading in a fairly consistent uptrend since Jan. 6, and most recently the stock has traded higher within a rising channel pattern. The pattern is considered to be bullish until a stock breaks down from the lower trend line on higher-than-average volume, which can indicate a longer-term downtrend is in the cards.

• Apple’s most recent higher high was formed on May 19 at $176.39 and the most recent lower low was printed at the $170.52 mark on May 24. Bullish traders want to see Apple print its next higher high over the next few trading days, where the stock may find resistance at the upper trend line of the channel.
• If Apple continues to trade within the channel, and regains the median line as support, the stock could be headed for a new all-time high over the coming weeks.
• Bearish traders want to see Apple top out under $176 and print a bearish reversal candlestick, such as a doji or hammer candlestick, which would negate the uptrend. If that happens, bearish traders want to see big bearish volume come in and drop Apple down under the channel pattern.
• If Apple breaks down from the falling channel and enters into a downtrend, volatility in the stock market could pick up.
• Traders wishing to trade the volatility in the stock market can use MIAX’s SPIKES Volatility products. The products, which are traded on SPIKES Volatility Index (SPIKE), track expected volatility in the SPDR S&P 500 over the next 30 days.
• Apple has resistance above at $177.71 and $182.13 and support below at $174.33 and $171.03.

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