AAPL: Wedge vs. Divergence

AAPL is trading right into a falling wedge with the 50 EMA acting as strong resistance while simultaneously showing bullish divergence against MACD. Typically, each of these individual signals indicate different moves: the falling wedge is bearish and the bullish divergence is... well, bullish. However the failed break back in late November is certainly giving this a more bullish feel. Additionally, we are at a very strong, 2 year support level around that $84-$85 range.

This is a great time to set up a bracketed entrance as our anticipated downside target is $71 (with a pause at $80) and conversely the upside potential is roughly $110. This is also a great example of the moving averages forming the wedge for us as we see the price caught between the 20 EMA and the 50 EMA. Look for AAPL to trade sideways for a few more days with an entrance into a trade as the price breaks through either one of these averages. Remember to confirm the break based on volume and a tested pull back and I'd have obvious caution in the event of a downside move at the $85.27 support.

Below is a chart of the analysis. I've also posted a larger version here:

As always, Happy Trading!