Apple Edges Higher As Traders Await Fed's Favorite Inflation Data: A Technical Analysis

Apple, Inc AAPL was edging up about 0.5% on Thursday after closing Wednesday’s session about 2% higher on the break up from a bull flag pattern.  Bullish momentum may have followed on Thursday, but the market is likely waiting to see headline PCE data, which is expected Friday morning.

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 downward 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 formed a bull flag pattern between March 13 and Tuesday, with the pole formed over the first eight trading days of that time frame and the flag created over the four trading sessions that followed. The measured move of the bull flag is about 10%, which suggests Apple could rise up toward $172 in the future.

• On Wednesday, Apple broke up from the bull flag pattern on increasing volume, which indicates the pattern was recognized, but on Thursday, Apple’s volume was measuring in lower than average. This is likely due to bearish price action in the general market, with the SPY falling from its high-of-day.
• Apple is also trading in an uptrend, with the most recent higher low formed on Tuesday at $155.98 and the most recent confirmed higher high printed at the $162.14 level March 22. On Thursday, Apple popped up above that level, but Friday’s price action will need to be seen before it can be determined whether the next local high has formed.
• If Apple closes the trading session with an upper wick, the stock will print a shooting star candlestick, which could indicate lower prices will come on Friday. If the stock closes the session near the high-of-day, Apple will print a bullish kicker candlestick, which could indicate higher prices are in the cards.
• Apple has resistance above at $162.14 and $167.88 and support below at $158.09 and $153.92.

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