Daily Analysis

By: TheWaveTrading | Tue, Apr 17, 2012
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As discussed:

I have a bullish bias for the long-term EWP:

In the monthly time frame we can highlight a wide target range = 1328 - 1258

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I have a bearish bias for the short-term EWP:

In the weekly chart below we can see the potential completed Zig Zag off the October 4 low. The loss of the 10 w MA is a strong indication of the trend reversal.

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In addition, on Friday, the weekly RSI has breached the Trend Line Support in force since August.

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In the weekly time frame we can obtain a detailed view of the support areas that can be challenged by the corrective pattern in progress: 1340 - 1328 - 1300/1292 - 1279

It seems that the majority is looking at the 1340 area, then maybe the 20 w MA = 1328 will come into play as an intermediate target while the range 1300 - 1279 could be tested as a final target if price unfolds a large correction.

Regarding the potential EWP, price should unfold one of the following:

Therefore price should be now involved in tracing the first down leg, which I am labeling as wave (A=ABC) that should be aiming at the first target support in the area of 1340-1328.

Even if a move to 1340-1328 could complete a corrective EWP I believe that the odds of a larger retracement are quite substantial, therefore I expect a large rebound followed by at last one more leg down.

3 issues must be taken into account in order to try to be on the right side of the EWP:

Short-term price action:

I am expecting another down leg, a wave (C), off the April 2 peak that should at least match the 64.80 points drop of the first down leg.

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Given the choppy price action of the last two days, keep in mind that a wave (C) has to be impulsive, even though there seems to be selling pressure at the 50 d = 1376.50, it seems that price has not established yet the top of the wave (B). In addition yesterday's Doji fits better as a bottoming candlestick rather then a bearish one.

If price has more business to accomplish before beginning the second leg down we can expect a sideways move shaping a triangle or a zig zag higher that should be capped in the range 1396-1398.

AAPL has confirmed the ending pattern I suggested on April 8. The down side actions looks impulsive, but a fiver is almost completed, hence a wave (2 / B) bounce should be around the corner.

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Monthly Opex next Friday and above all FOMC meeting + Bernanke press briefing next Wednesday could delay the kick off the assumed wave (C) down.




Author: TheWaveTrading


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