Is Apple Headed To $173 Next? What To Expect As The Stock Breaks Bullishly From This Pattern

Apple Inc. AAPL was breaking up from a bull flag on Wednesday, spiking up over 2% higher and over the July 29 and Aug. 1 high-of-day.

The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines or into a tightening triangle pattern.

For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.

• Bullish traders will want to watch for a break up from the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.
• A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern or if the flag falls more than 50% down the length of the pole.
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The Apple Chart: Apple’s bull flag was formed between July 26 and Tuesday, with the pole created over the first four trading days in that time frame and the flag formed on Monday and Tuesday. The break up from the pattern came on higher-than-average volume, which indicates the pattern was recognized but the algorithms.

• The measured move of the break is 8.5%, which suggests Apple could fly up toward the $173 mark before topping out. Apple has created a series of bull flags in its uptrend and has come close to meeting the target of the measured move each time.
• See Also: Apple Faces Antitrust Lawsuit By French Developers For App Store Fees In U.S.
• In Apple’s uptrend, the most recent higher low was formed at the $159.63 mark on Tuesday and the most recent confirmed higher high was printed on July 29 and $163.63. Eventually Apple will retrace to print its next higher low and traders and investors who aren’t already in a position can look for the stock to print a bullish reversal candlestick, such as a doji or hammer candlestick, above the $160 level for a possible entry point.
• A pull back is likely to come over the next day or two. Apple’s relative strength index (RSI) is measuring in at about 69%, which is at overbought territory. Apple’s two-day consolidation into the flag pattern wasn’t enough to cool the RSI significantly, which may make the break of the pattern weaker.
• Apple has resistance above at $167.88 and $171.03, and support below at $162.14 and $157.26.