I do not like the fact that Apple (AAPL) has declined for more than those prior declines on the weekly chart. Before this, we had only seen declines that were less or similar to the prior declines on this chart between $8.56 and $12.12. With AAPL already making a key weekly upside target, this does concern me. Does that mean that AAPL will not resume the rally anytime soon?
No. Actually, it is a factor that warns us of that possibility, but we just have to look to the next key decision on the daily chart. Then, we watch and see if that next decision holds up or not. If price holds above it, we can look for triggers that tell us it's worth placing a bet against the zone. Let's take a look at the daily chart next.
On the daily chart, we are faced with a new decision at the $104.57-$106.37 area. This zone includes a 0.618 retracement of a prior major decline, along with a 100% projection of a prior swing down, and a 1.618 extension of a prior low-to-high swing. So far, the recent low has been made at $106.26, which is directly within this key zone.
Besides the price support that is currently being tested, I'm also looking at a few Fibonacci time cycles that are due between Dec. 16 and Dec. 18. These cycles are illustrated on the chart below. If price does indeed hold above this area, you can look for your buy triggers and define your risk below the zone, if you like. If you want a higher-probability setup, the following is what you will need to wait for. I will illustrate these next parameters on a 78-minute chart for now.
One of the things I want to remind you of is that after AAPL had violated some of the shorter-term symmetry, I told you we needed to watch the resistance on the way back to the Nov. 25 high. I did not know for sure that price would fail there, but I wanted to proceed with caution at that time, due to the "break in symmetry." Since then, AAPL has been unable to clear important resistance after these failures.
Now that the stock has made another low into key time/price support, let's look at the area of this time frame that it needs to clear, if this low were going to take the stock to higher prices. You can see a nice, healthy cluster of price resistance at the $111.14-$112.21 area. This zone comes in below the prior swing high at $114.85. If the recent low in AAPL is any good, we need to clear both this resistance cluster and the prior swing high made at $114.85.
Unless that happens, AAPL is still vulnerable to a deeper downside correction. If the Dec. 15 low at $106.35 is more important, then the $123.42 area becomes the first meaningful upside objective.
You can still consider a buy against the support and timing discussed earlier, but if you prefer the safer bet, let AAPL prove itself by clearing both the key 78-minute resistance, along with the prior swing high at $114.85. If that occurs, then I would set up the next pullback for the higher-probability re-entry into the long side of AAPL.
I have one more setup for you to look at, on this Agios Pharmaceuticals (AGIO) chart. This is a trend trade setup that includes multiple 100% projections of prior corrective declines. Note that many of these are illustrated on the daily chart below.
If the key support on this daily chart holds, then the initial upside target will be around the $129.45 area. If this same support is taken out, I will consider myself wrong in the trade, and back off the buy side until further notice.
