Apple breaks ascending pattern

Note: This section contains information in English only.
Source: Dukascopy Bank SA


Since June up to late July, the price for Apple stock gained more than 40.00%. The surge occurred due to two fundamental factors. News were reported that the company was not loosing as much of the Chinese market to competitors, as previously forecast. Meanwhile, inflation was heading down, which signalled that the US Federal Reserve will cut interest rates and with it the US Dollar's value would decline, which would boost stock buying. Note that Apple is one of the top stocks bought by retail investors due to the popularity of the brand. This fundamental surge was captured in the borders of a technical channel up pattern.

Most recently, news were released that the firm is still slowly loosing market share in China to local gadget producers. Meanwhile, the tech sector has revealed that investment costs in new AI tech continued to increase at a faster pace than profit from it. In addition, macroeconomic data and the US political environment indicates that the US Federal Reserve might not cut interest rates, in 2024.

It has resulted in a decline of the stock price, which initially was seen as another consolidation in the channel up pattern's borders. However, most recently, the channel up pattern's lower trend line did not hold. Moreover, the price passed below a prior high level zone that had failed to act as support. On July 29, the price appeared to be confirming the prior support as resistance.

However, the future outlook is set to be revealed by this week's events. The US Federal Reserve will announce its base interest rate and monetary policy statement on Wednesday. Despite no cut or hike being expected, the Fed will comment on its decision making that will provide insight into the September rate announcement. Meanwhile, Apple is revealing its quarterly financial results on Thursday. The firm will confirm or deny whether the tech sector cost trends are affecting it and how it is doing in markets across the world. As the stock price picks a direction, one needs to note potential support and resistance levels.

In the case of breaking of the resistance of the 218.80/220.20 range, the stock price is expected to face no resistance, unless the prior high levels turn into a resistance range at 233.00/237.00.

If the fundamentals add more momentum to the decline, the stock price of Apple might find support in the ascending 50-day simple moving average. Below the SMA note the prior resistance and support ranges at 206.60/207.50 and 192.70/197.30.
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