Technical Analysis – Could Apple stock break out of asymmetrical triangle ahead of products launch?

Christina Parthenidou, XM Investment Research Desk

Apple stock is edging higher ahead of the anticipated unveiling of new products later on Tuesday, including an updated iPhone.

The company’s share price is trading around the upper boundary of an asymmetrical triangle and although the RSI and the MACD both reflect a bullish bias, the Stochastics are ready to print a bearish cross above the 80 overbought mark, signaling that a downside correction could be around the corner.

Should the bulls close comfortably above the 215.00 ceiling and hence the triangle, the rally may get additional legs to touch the 9-month high of 221.26 registered in July. A steeper rebound could also retest the 224.00-229.00 area, where the price found resistance last year before all attention shifts to the historical high of 233.38.

In case the bears retake control, the price could retreat to meet the bottom line of the triangle seen around 205.00. A significant violation at this point could enhance the bearish action, sending support towards the 61.8% Fibonacci of 198.46 of the downward move from 233.38 to 141.93. Further down, a more important battle could take place in the 187.74 neighborhood, where the 50% Fibonacci, the 200-day simple moving average (SMA) and the bottom of the Ichimoku cloud are currently placed.

Summarizing,  Apple’s stock price continues to face positive vibes in the short-term, though the bulls seem to be approaching the limits of the overbought territory, increasing the odds for a downside reversal.