Monday, December 28, 2015

AAPL Update #56

AAPL continued to show weakness. I am going to try and attached some charting with supply and demand levels to illustrate the thinking around any subsequent trades.

With today's price action, there are some conclusions I can form about the near term direction of AAPL.

The chart below is a 1hr timeframe with some detail about two levels I will be watching.

The yellow block on the chart is a area that encompasses a new demand zone found on the daily timeframe. Two things are obvious from today's price action:

1. A nice fresh 60min demand zone was easily broken. If there was sufficient demand this should have bounced or been slowed down.

2. The price action went quite deep into the daily zone and the reaction from it was muted. The initial leg out of this demand zone was also very weak. Overall it could not break the upper zone at 107.48 (dashed line).

3. The demand zone itself has a series of levels on levels on the 60min timeframe each being tested -- none are fresh. The expectation is that price will fall from here.

4. There is a nice 60min supply zone at the 108.40 level, two basing candles, strong move away.  When price returns here the reaction is important. Since the lower timeframe (60min) demand level inside the larger time frame demand (Daily) was not respected, there are many unfilled sell orders. I expect price to bounce lower from any test here.

This supply zone, however, is not high on the curve and is not in either the daily demand or supply zone. I will watch how this reacts but would not trade this area. It's a 50/50 chance to any direction and to whether it will hold.

Conclusion: in the days ahead I expect price to go lower as the path of least resistance until a test of fresh weekly demand below the 92pt price level. The amount of trading in the 60 min demand zone, all with tested levels, indicates that demand here is weak.

This staggered 60min multiple level demand zone shows up a long wick in the daily -- a way to think about this is that if there was so much demand at this level, price would have never been able to test this far lower.

If the daily zone is broken, price will most likely be heading lower.

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