Apple, Inc (NASDAQ:AAPL) briefly dipped below Thursday’s low on Friday following remarks by Federal Reserve chair Jerome Powell at the Jackson Hole Symposium, suggesting the central bank hasn’t ruled out further interest rate adjustments.
During this trading activity, Apple exhibited the potential for a doji candlestick formation, hinting at the possibility of a higher low. If this pattern is acknowledged and Apple gains ground on Monday, it might signal the onset of a new upward trend.
An upward trend emerges when a stock consistently achieves higher highs and higher lows on its chart.
The ascending highs signify bullish control, while the intermittent ascending lows point to consolidation phases.
To detect an uptrend, traders can refer to moving averages. Rising moving averages on shorter timeframes (like the eight-day or 21-day exponential moving averages) suggest a pronounced short-term upward trend. On the other hand, ascending long-term moving averages (such as the 200-day simple moving average) indicate a sustained long-term uptrend.
However, if Apple descends further on Monday, the higher high recorded on Wednesday—which invalidated the downtrend—could turn into a bull trap, possibly prolonging the downward trend. This scenario could heighten market volatility due to Apple’s significant weighting within the S&P 500.
Traders eyeing potential volatility have several choices, including the ConvexityShares Daily 1.5x SPIKES Futures ETF (NYSE:SPKY).
SPKY is a 1.5x leveraged fund that monitors the SPIKES Futures Short-Term Index, gauging volatility in broad-based equities similar to the ProShares Ultra VIX Short Term Futures ETF (NYSE:UVXY), which tracks the S&P 500 VIX Short-Term Futures Index’s movements.
For every 1% daily fluctuation in the SPIKES Futures Short-Term Index, the SPKY fund aims to shift by 1.5%. This makes it suited for short-term trades and not ideal for long-term holding.
Apple Chart Analysis: On Wednesday, Apple marked a higher high at $181.55, surpassing the most recent lower high of $179.69 on Aug. 14. This higher high invalidated the downtrend. Yet, confirmation of a new uptrend still hinges on the formation of a higher low above $171.96.
Friday saw Apple trading mostly sideways on low volume, suggesting a consolidation phase. If this lateral movement continues on Monday, be on the lookout for potential inside bars forming with declining volume before the stock picks a direction.
Bullish traders will seek robust bullish volume to push Apple beyond the 21-day exponential moving average (EMA), bolstering their confidence. Conversely, bearish traders anticipate a close below the eight-day EMA, which could hasten a downward move.
Apple faces resistance at $177.71 and $182.13, with support at $174.33 and $171.61.