Apple Prints Bearish Pattern Ahead Of Big Tech Earnings Week: What Are The Chances The Stock Closes April Green?

Zinger Key Points

Apple is settling into a possible bear flag pattern on a week several of its peers will report earnings.
Bullish traders want to see Apple regain the eight-day EMA to negate the bearish pattern.
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Apple Inc AAPL was falling slightly on Tuesday after temporarily regaining the eight-day exponential moving average (EMA) but failing to hold above the level.

From a technical standpoint, the trading action since April 19 set the tech giant into a bear flag pattern on the daily chart but with several mega-cap companies reporting earnings this week, individual names that don’t report financials may negate patterns and formations to trade in tandem with their peers.

Historically speaking, data released by Cerv Knowledge on Twitter shows Apple closed the month of April in the green 60% of the time since 2017. So far this month, Apple gained about 0.2% over the March close after surging almost 12% that month.

Looking forward, the data shows Apple closed higher the month of May higher 70% of the time, while in June, the odds of a green monthly close sits at 50%. Since 2017, Apple’s most bullish months of the year were July and August, where the stock closed higher 90% of the time and 80% of the time, respectively.

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The Apple Chart: If Apple’s bear flag is recognized, the measured move is about 2.5%, which suggests the stock could retrace toward the $162 level on a break down from the pattern. Bearish traders want to see Apple fall under the lower ascending trendline of the flag on higher-than-average volume, which would indicate the pattern was recognized.

Bullish traders want to see Apple regain the eight-day EMA as support, which would negate the bear flag. If the stock can regain the eight-day and big bullish volume comes in to drive Apple up above the April 19 high of $168.16, Apple’s uptrend will also remain intact.
If Apple breaks down from the bear flag, Tuesday’s high-of-day will serve as a lower high, which will negate the current uptrend and suggest a downtrend could be in the cards.
Apple has resistance above at $165.61 and $167.88 and support below at $162.14 and $158.09.