Apple shares have been rallying for the past few days thanks to the return in risk appetite but the longer-term selloff might resume soon. Price is nearing the descending trend line visible on the daily time frame, and this lines up with the 100 SMA.
This moving average is below the longer-term 200 SMA so the path of least resistance is to the downside and the selloff might resume. A higher pullback to the 61.8% Fib at $109-110/share could still be possible, but this would be the line in the sand for any correction.
Apple shares are likely to bounce off this area of interest since it also lines up with a former support level. Profit-taking might occur towards the end of this month, ahead of a shortened trading week and also the end of the quarter.
If so, price could drop until the previous lows above $92 or at least halfway until $98-100/share, which also lines up with a shorter-term area of interest. On the other hand, a move past the trend line could lead to a test of the 200 SMA dynamic resistance.
Stochastic and RSI are both pointing up but are in the overbought levels. Once these oscillators turn lower, bearish pressure could return and allow the downtrend to carry on.
Apple shares got a boost from the downbeat FOMC statement yesterday as the likelihood of having low borrowing costs for much longer could mean cheap credit for businesses and consumers, which would support investment and sales. However, the Fed also highlighted the weak growth outlook, particularly that of China, which is one of Apple’s largest consumer markets.
Still, some stock analysts believe that Apple shares are poised to soar, noting the cup and handle pattern that formed so far this year.
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