Apple Edges Toward All-Time Highs As Market Awaits Fed Decision: The Bull, Bear Case

Zinger Key Points

Apple is trading in a rising channel pattern, working its way back toward the all-time high.
The stock is likely to react either bullishly or bearishly to the upper trend line when the Fed issues its rate decision.
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Apple, Inc AAPL was edging slightly higher on Wednesday ahead of the Federal Reserve’s decision on whether to hold interest rates steady or continue its hawkish campaign and apply another raise.

Producer price index data released Wednesday morning came in lower-than-expected, helping to support the market’s belief that the central bank will pause its hike cycle. The S&P 500 climbed slightly higher in response.

Apple’s move higher saw the stock working its way toward the upper trend line of a rising channel pattern, which the stock has been trading in since March 22. The pattern is considered bullish until a security breaks down from the lower trend line on higher-than-average volume.

In the shorter-term, bearish traders also watch for stocks trading in a rising channel to reject the upper trend line, which can provide a good short entry for bears or a sell signal for bullish traders.

Whether Apple breaks up above the upper trend line of the channel or rejects the area and falls is likely to depend on the Fed’s decision at 2 p.m. ET. If the central bank applies a surprise rate hike, the market is likely to enter into a period of volatility.

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The Apple Chart: If Apple breaks up from the channel pattern, the stock will reach a new all-time high, which suggests a blue-sky run could be on the horizon. On the initial break, the stock may retrace to back-test the all-time high, which is currently $184.95, which can provide a good entry point for bullish traders.

If Apple continues higher, a pullback is likely to come over the next few days because the stock’s relative strength index (RSI) is measuring in at about 72%. When a stock’s RSI reaches or exceeds the 70% level it becomes overbought, which can be a sell signal for technical traders.

If Apple continues to reject the upper trend line of the pattern, bearish momentum could accelerate in the short-term, which could cause Apple to retrace toward the median line of the channel or even the bottom trend line.

Apple has resistance above at the all-time high and support below at $182.13 and $177.71.