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Apple Inc - bullish reversal pattern

CMC Markets

Apple released its results after the US market closed.

 The current trading session looks as though it could be interesting. Will investors buy on a share buy back and higher dividend payout ratio despite falling revenue and mounting industry competition?

If the answer is yes, the completion of  a 3 drives to a low pattern may indicate a significant rally off recent lows.

Daily Chart

Apple CFD - source CMC Tracker

This pattern involves being able to put a trend line across the 3 drives to a low. A key to this set up, I reckon, is that the trend line should not be steeper than about 45 degrees and should be flatter than the down trend leading into the set up.

In this case the potential 3rd drive lower flicks just under the trend line which is common. It also found a Fibonacci cluster which is encouraging. This consists of projections that the 3rd drive lower will be 127% of the 2nd and 161.8% of  the corrective rally that began at "2".

A typical approach to strategy would be to place the initial stop just behind the low at "3". If that's taken out the pattern has failed.

If a rally gets underway, I'll post a follow up discussion on profit objectives.  


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