Apple Inc. (NASDAQ: AAPL)

Apple Inc. designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players to consumers, small and mid-sized businesses, education, and enterprise and government customers worldwide. The company also sells related software, services, accessories, networking solutions, and third-party digital content and applications. The company sells and delivers digital content and applications through the iTunes Store, App Store, iBooks Store, Mac App Store, and Apple Music.

Take a look at the 1-year chart of Apple (NASDAQ: AAPL) below with my added notations:

AAPL tests the line

AAPL has been trending lower since its peak back in July. Over that time, the stock has formed an important trend line of resistance (red). Any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. So, AAPL definitely seems to have an important trendline of resistance, which currently sits right around $110. A break above that line should mean higher prices, overall, for the stock.

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The Tale of the Tape: AAPL is currently stuck under a down trending resistance. A break above that resistance should mean higher prices for the stock, thus a long trade could be made. Short traders might look to enter a trade at the resistance.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach