Apple Near Gap-Fill, Charges Higher Within This Trend: A Technical Analysis And Option To Play Retracements

Apple, Inc AAPL was trading slightly higher Thursday, helping to lead the S&P 500 north after Personal Consumption Expenditures data released by the Bureau of Economic Analysis showed the economy is softening, leading to hope the Federal Reserve will hold interest rates steady next month.

The tech giant’s move higher saw it trade within an upper gap above the 50-day simple moving average, as the stock continued in a strong uptrend. An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.

The higher highs indicate the bulls are in control while the intermittent higher lows indicate consolidation periods.

Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.

Rising longer-term moving averages (such as the 200-day simple moving average) indicate a long-term uptrend.

Apple may find resistance at the top of the upper gap, which could set the stock into a retracement. If that happens, volatility in the stock market is likely to increase.

Traders wishing to play the potential 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 SPY over the next 30 days.

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The Apple Chart: Apple’s recent uptrend began on Aug. 18 and since then, the stock has been making a series of higher highs and higher lows. The most recent higher low was formed on Aug. 25 at $175.82 and the most recent confirmed higher high was printed at the $181.55 mark the day prior.

• Because Apple hasn’t retraced over the last four trading days, a dip, at least to form another higher low, is likely on the horizon. That dip is likely to come if the stock fully fills the upper gap, which exists between $187.38 and $190.69.
• If Apple doesn’t completely fill the gap on Thursday or Friday and closes Thursday’s session with an upper wick, the stock may back-test the bottom of the gap before attempting to fill it completely. If Apple loses the lower range of the gap, the stock could fall to the eight-day exponential moving average.
• Apple has resistance above at $189.61 and at $194.48 and support below at $184.95 and at $182.13.