Technical Analysis – Apple stock pulls back from five-month high; holds uptrend alive

Christina Parthenidou, XM Investment Research Desk

Apple’s stock price gave up some gains after topping at a fresh five-month high of 208.39 last week and as the RSI in the four-hour chart peaked in overbought area. The 20-period simple moving average (SMA), however, stood on the defensive once again, keeping the market action in the January uptrend.

The falling RSI and the weakness in the MACD suggest that the price may find it hard to recover in the short term, turning the spotlight to the 20-period SMA (203.79) which if significantly violated could trigger a new wave of selling.  The area between the 23.6% and the 38.2% Fibonacci levels of the upleg from 184.50 to 208.39 (202.42-200) has trapped market action recently and should be in focus, while a  decisive close below the 50% Fibonacci of 196.17 and therefore the 50-period SMA may confirm the start of a bearish phase.

On the flip side, a rally above the 208.39 peak would put the market back into the bullish mode, opening the way towards the 211-215 key region. Moving higher, the 222 level could be the next challenge.