Let’s take a look at some possible scenarios so when anyone of these scenario arises, you as a trader will be prepared.
The first thing we should notice on the chart below is that AAPL has been up for five consecutive days, and looking at those incidences where it has been up for four or more consecutive days, a slight pull back usually follow. Therefore, if AAPL pulls back within the next few days, one should not be surprise and get shaken out on the first sign of lower prices.
The weekly chart shows the price also has reached and slightly went beyond the Fibonacci 161.8% extension. This extension level has a tendency to act as resistance. Therefore, it gives credence to the possibility of a pull back in the near future.
Now let’s take a look at where the upside price level could be with or without a pull back.
First is the cup & handle price pattern. The measured move projected price target for this pattern at 80% and 100% level is 104 and 110 respectively.
Next is the retracement of the price move between the months from September 2012 to June 2013. The Fibonacci 127% extension of this retracement will place the price near 113.
Switching back to the daily price chart, the Fibonacci retracement between the months of April to July of this year has a 141% extension at the 110 level. This level is in confluence with the 100% measured move of the cup & handle pattern.
Finally, on this daily price chart, a price channel formed between the months of April to the present has its upper trend line projected out approximately to the 104 level after the next five trading sessions.
What does all these charts and price levels tell us? They tell us there is a confluence near the 104 and the 110 level, which are near the 80% and 100% of the cup & handle price pattern. Therefore, we should pay attention to these levels for potential profit taking that might push the price down to near term support levels near 99, 96.50 or 94.50.
