Apple just released its first quarter earnings report and investors were disappointed to see a decline in iPhone sales. The company also missed analysts’ expectations for revenue and profits.
Apple shares previously broke below the neckline of a double top formation visible on the 1-hour time frame, signaling that a decline is in the cards. In addition, the 61.8% Fibonacci retracement level on the swing high and low on the 4-hour time frame held as resistance. This could put Apple shares on track towards testing its previous lows at $92.
The 100 SMA is still below the longer-term 200 SMA for now but it looks like an upward crossover is about to take place. If so, buyers could jump in an allow price to recover to the previous highs at $112.
Also, stochastic is indicating oversold conditions which means that sellers are exhausted and might let buyers take over. RSI is on the move down but is nearing the oversold area as well.
However, the path of least resistance might be to the downside, as the company projected that its current quarter figures might fall short of expectations also. Sales to China fell by more than 25% and this is the company’s second largest market next to the United States.
Apple’s products continue to face stiff competition from cheaper alternatives, as the company sold only 51.9 million iPhones in the first quarter compared to 61.2 million units in the same quarter last year. The iPhone accounted for 65% of the company’s revenue in the March quarter.
Still, Apple CEO Tim Cook is hopeful that the company can find other revenue streams outside of its gadgets, such as iTunes or its streaming services. Sales of other Apple products such as the iWatch have failed to make up for weaker iPhone sales so far.
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