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Key Takeaways
- Apple shares shed 2.3% on Thursday as investors pivoted out of top-performing large-cap tech stocks into small caps that may benefit more from expected rate cuts by the Federal Reserve this year.
- Despite Thursday’s drop, Apple shares remain in an uptrend, with the price continuing to gain momentum this month after breaking out from a pennant pattern.
- The measuring principle, which calculates the distance of the trend in points that proceeded the pennant and adds that amount to the pattern’s top trendline, forecasts a price target of $271.
- During pullbacks, Apple shares may encounter support on the chart at levels including $220, $197, and $190.
Apple (AAPL) shares shed 2.3% on Thursday to record their largest one-day percentage fall since late March as investors pivoted out of top-performing large-cap tech stocks into small caps that may benefit more from rate cuts. The rotation came after a government inflation report revealed that consumer prices unexpectedly fell in June, raising expectations that the Federal Reserve will start cutting its benchmark interest rate soon.
Below, we take a closer look at the technicals on Apple’s chart, while also pointing out important levels to watch out for that may come into play over the coming weeks.
Uptrend Remains Intact
Despite Thursday’s decline, which snapped a seven-session winning streak for the stock, Apple shares remain in a longer-term uptrend.
After breaking above key resistance to a new record high in mid-June, the stock’s price consolidated within a pennant pattern for several weeks before gaining further upward momentum this month.
Moreover, a recent cross of the 50-day moving average (MA) above the 200-day MA to form a bullish golden cross signals rising prices.
Samsul Said / Bloomberg / Getty Images
Watch This Area Amid Further Upside
To project a potential upside target in Apple shares, we can use the measuring principle. We do this by calculating the distance of the trend in points that proceeded the pennant and apply that amount to the pattern’s top trendline.
For example, we add $56 to $215, which forecasts a price target of $271. This technique provides investors with a general area on the chart where the shares may trend to if the price rhymes with the prior move higher between late April and mid-June.
Monitor These Key Levels During Pullbacks
Despite the bullish technicals, it’s worth monitoring several locations on the chart where the price would likely encounter support if the current pullback continues.
The first area sits at $220, a level that may attract buyers near the pennant pattern’s high.
A failure to hold this initial area could see Apple shares fall to around $197, where they would likely find support near a horizontal line that connects several prior record highs and the upward sloping 50-day MA.
Finally, a deeper retracement could spark a fall to around $190, a chart location that finds support from a trendline linking a range of peaks and troughs from September 2023 to May this year.
Apple shares were up 0.4% at $228.41 in recent premarket trading Friday.
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