Apple Stock Forecast: AAPL using the 200-day moving average perfectly

Apple continues to look rangebound with strong support from the 200-day moving average and our identified consolidation zone from back in March. There is nothing screamingly obvious from a technical perspective but the broader market remains strong and equity flow data and Fed policy remain supportive. Apple has been largely holding its 200-day moving average and it must be taken into consideration how bearish a break of this level would be. Apple has not been trading below its 200-day moving average since the pandemic crash in March 2020. 

AAPL stock forecast

The 200-day moving average has been acting as a strong support area and this nicely coincides with the consolidation phase from March of this year. It should be noted fundamentally how strong Apple's results were back on April 28 but it has been one-way traffic since that post-earnings spike to $137. Operating with or against fundamentals is not the key to successful trading in general, perhaps long-term investing but not trading. The market will tend to do what it wants and discard the newsflow or fundamentals over a shorter time frame. 

The facts are despite AAPL posting earnings over 40% ahead of analyst expectations as well as increasing its dividend and buy back program, the stock continues to drift lower. There may be a number of reasons for this such as rotation into other sectors. The focus on inflation problems and yields led the Nasdaq to suffer more than most and despite Apple not being a typical Nasdaq stock it still seems to be dragged down with it when tech stocks suffer.

However, AAPL is only 10% away from the earnings highs as the volatility is relatively benign. Strong support is identified in the consolidation zone as mentioned but getting deeper into this zone entails breaking the 200-day moving average. A new and as yet relatively untested uptrend channel has come into play as shown. This has also floated nicely along with the 200-day moving average. A proper bearish break would see Apple target the $99.24 support line but given the relative lack of volatility, this would be accompanied most likely by a strong market meltdown.

It seems unlikely Apple on its own can trade below $100 with the current broad market remaining supported. Using this strong support zone from the 200-day moving average and the strong consolidation phase from March 2021 can be used to initiate long positions with appropriate risk management. Look for an initial break of the short-term moving averages, 9 and 21-day, and then a break of the $127.87 resistance. There is a small consolidation zone from here until $135 but a high volume break of $135 should entice further bulls in and push for fresh highs.

The alternative is more range play as we have been witnessing. Range plays can successfully be played by using the high percentage probability trades and options to minimize losses from an explosive range breakout. In the case of Apple, it would appear the risk-reward is still favoured to the upside. Strong results, strong broad market and buy-the-dip mentality still in play.