May 28

Apple Could be Running in an Irregular Flat

Apple (NASDAQ: AAPL) advances on Thursday session in an impulsive structure that could complete the second wave of an irregular flat pattern.

AAPL, in its 2-hour chart, unveils the sideways movement that the technology company develops since it reached its top at $327.84 per share on January 29th, from where the price action started to decline in three movements of Minute degree identified in black.

Once AAPL plummeted in three consecutive waves easing over 35%, the price completed a first corrective wave of Minor degree labeled in green at $212.61 per share on March 23rd. After the price found fresh buyers in the March’s low, Apple began to bounce, developing an upward sequence in three waves, which currently remains in progress. The current bullish wave looks like an impulsive sequence, where the price action seems to advance in its fifth wave of Minuette degree labeled in blue.

The bearish divergence between the RSI oscillator and the price action, traced in red, drives us to note that the fifth wave of Minuette degree should still be in progress. At the same time, in the RSI, we observe exhaustion signals. In particular, the leading oscillator moves in the range between 40 and 60, which leads us to conclude that the trend is in an exhaustion or consolidation stage.

Once the current bullish sequence ends, AAPL will end a wave ((c)) of Minute degree labeled in black, and at the same time, will complete its wave B of Minor degree in green.

On the previous chart, we observe the sideways channel that covers the range of the massive sell-off corresponding to wave A in green. Simultaneously, the bullish momentum that shows the technology company leads us to consider the possibility of thrust over the upper line of the sideways channel, where the price could react bearishly.

Taking into consideration that the first decline and the subsequent recovery corresponds to a three-wave sequence, additionally, considering the bullish momentum with the possibility of thrust over the upper line of the sideways channel, which we could be recognized as a false breakout, we could conclude that, according to the Elliott wave theory, the price action could be developing an irregular flat pattern. The irregular flat pattern characterizes by its wave B extending beyond the origin of wave A and C tending to finalize before the beginning of wave B.

In consequence, our preferred positioning for Apple remains neutral until the upward sequence completion. A bearish positioning could be confirmed if the price drops and consolidates below $300.40 per share.