1. Fib. Expansion Resistance
- 161.8% Fib. level has been served as very crucial resistance as I further explain why that was the PEAK of this huge bullish rally.
- Also 138.2% Fib. level is working as current short-term resistance
2. Exhaustion & Break-away Gaps
- Exhaustion gap on 9/14. We continued bullish for days until $AAPL got exhausted and starting rolling over after hitting the Fib. Expansion level resistance.
- We followed by Break-away gap on 9/24. If we put both those two gaps together, you get the strongest reversal signal in chart patterns.
3. Island Reversal
Island Reversal is the strongest reversal signal in chart pattern and its even stronger when it happens at the peak of a rally. It meets all the criteria that this is the Island Reversal
- Formed at the stop of this huge bullish rally
- Formed at Fib. Expansion resistance
- The break-away gap is STILL open
4. Possible Head and Shoulder
We are possibly forming a right shoulder for this Head and Shoulder reversal pattern. This is extremely bearish if this is confirmed because..
- It is happening at the peak of its bullish trend (resistance of 161.8% Fib. Expansion level)
- The way it is forming, is a classic and textbook Head and Shoulder pattern.
5. “Evening-Star” Reversal (weekly chart)
- Forming a Evening-Star reversal on weekly chart
- Evening star often occurs after a long rally of bullish run
- When this reversal is confirmed, could be deadly
6. Bearish Divergence on Weekly
- RSI has fully confirmed Bearish Divergence
- MACD is now starting to confirm this Bearish Divergence
7. Bearish Divergence on Daily
- All three indicators are showing that Bearish Divergence is CONFIRMED.
- Divergence is very strong reversal signal especially when it is confirmed with other technical analysis such as Island Reversal
- Divergence is happening on weekly and daily which isn’t that common to see . It makes it that much stronger reversal signal.
8. Bearish Divergence..It Happened Before
- March 2012 – May 2012 about $115 drop after slight bearish divergence
- This wasn’t even the full or text book Bearish Divergence like the one we see today
- We did NOT have weekly divergence at this time but we do have weekly divergence shaping up today.
9. $110 Drop is Expected
- Around $590 is my target.
- 7/30 gap area support is perfect stop for that target.
- Earnings is 10/25 I believe. I don’t trade anything through earnings.
10. It’s in Dire Situation Because…
- It is all happening on top of everything.
- Each reversal signal confirms with another reversal signal.
- It is happening after a huge bullish rally.
- All reversal signals are happening at the top of the resistance (peak of the rally).
- I have not seen this MANY kind of reversals happening at once
Weekly Chart Reversals
- Weekly Bearish Divergences are confirmed on STOCH, RSI and MACD. (I would say MACD is 90% confirmed because we should see the fast line cross over completely. They are only merged and haven’t completely crossed)
- Evening Star Reversal is still in effect but it will be confirmed and will be VERY DANGEROUS when we close below our current support of $657.00 level.
- When or if that support is broken, Evening Star is confirmed and we are heading down to our next support.
- Next support is $580 which is my ultimate target ($110 drop as I have described in the previous post).
- On daily chart, Head and Shoulder pattern is forming. Also gap at the top is still open suggesting Island Reversal is still in effect.
50 EMA Has Been Broken (Daily Chart)
- -50 EMA has been broken today. We could test that 50EMA as new support as it did back in 5/7/12 – 5/11/12 and continue to tank.
- Last time when 50 EMA was truly broken on May 2012, we traded all the way down to 100SMA.
- It’s a logical view but premature to say that we might be heading down to 100 SMA (about $620)as it did back in May.
Another $100 Drop Expected (Weekly Chart)
Weekly Bearish Divergence NOW confirmed
- MACD is finally rolled over and now we are FULLY confirmed on Bearish Divergence on all oscillators (very very strong reversal sign because we also have daily that has been confirmed for sometime now)
- Doji Evening Star Reversal is also FULLY confirmed because we have broken current support
- Parabolics just flipped to the bearish side supporting this move
- All three oscillators are rolling over.
- $530 price target to the downside
Weekly Bearish Divergences Starting to Play Out
10EMA and 200SMA has not been united for about 4 years now. This is the first time they met since then and this is why it is very significant event that it happened. Also up top 50EMA is now crossing 100SMA. This means bears are gaining more and more momentum in this intermediate bearish trend that could possibly turn into a primary bearish trend.
So many $AAPL traders were busy trying to figure out the bottom and the possible supports thus they ignored the moving average crosses which most big fund managers look at.
(Last September of 2008)
2008 September was the last time when 10EMA fully crossed 200SMA and it crashed.
Down Side Target Price Reached
As I have mentioned on my new article we are probably going to see some corrective move (a pull back) here at this point. But you can see all those reversals at the top created this monster to fall 200 points on $AAPL.
Many traders are now starting to change their perspective on $AAPL as a bearish trending stock from a extremely bullish stock. We don’t have any bullish reversal signals yet except for the fact that we closed with a hammer last Friday with very high volume. That could become a early reversal but we will need more confirmation.
Next Related Article
12/15/12 Next Target $360 on $AAPL ($160 DROP EXPECTED)