Apple Inc (NASDAQ: AAPL) has been in a sliding mode since Thursday, when it hit resistance near 196.00. Although the stock managed to end Thursday slightly in the green, on Friday and Monday, it surrendered to the bears and closed negative in both sessions. Ahead of its earnings for the fiscal third quarter, due out today after the US closing bell, Apple appears to be trading within a short-term range between he aforementioned resistance and the 180.80 support hurdle. In the broader picture though, the share continues to trade above the uptrend line drawn from the low of the 27th of June 2016, which keeps the overall positive path intact.
For now, given the bulls’ recent inability to conquer higher territories and bearing in mind the negative divergence between both our daily oscillators and the price action, we see the likelihood for the price to continue drifting lower, at least within the short-term range. A clear dip below 187.50 could confirm the case and could pave the way towards the lower bound of the range, near 180.80. If the bears stay in the driver’s seat and manage to push the stock below 178.85, then we may experience more downside extensions, perhaps towards the 173.10 level, or the long-term uptrend line taken from the low of the 27th of June 2016.
That said, even if this is the case, we would still consider the bigger upside path to be intact. We would still see a decent chance for buyers to jump in near the long-term uptrend line. We would like to see a clear close below 169.25 before we start examining the case for a trend reversal. Such a dip could set the stage for extensions towards the 161.00 territory, near the lows of the 24th and 27th of April.
On the upside, if the bulls decide to jump in from current levels, then we may see them driving the stock back up for a test near 194.20, or the upper bound of the short-term range at 196.00. Now, if they prove strong enough to overcome the 196.00 obstacle, we may see them aiming for the psychological territory of 200.00. The catalyst behind a possible rebound, at least towards 194.20, could be solid earnings results after the US session ends today.
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