Join Dstockmarket's Community - Daily Market Analysis, Individual Stock Analysis.
In this lesson, we will learn how AAPL's 15 Min stock chart formation help to send the stock higher for 2-3 days to give traders a nice swing trading opportunity.
What happened to Apple was that it gap up nicely after a great earnings report. Sometimes it is not a good idea to chase stocks right after their earnings. Because what gaps up can close back down to close the gap.
But in the case of Apple, the 15 min chart provided observant traders a nice opportunity for a swing trade.
Before we look at the 15 min chart of Apple, let us take a look at the daily chart of this stock to see the bigger picture.
The chart above shows the daily chart of AAPL. As you can see, the stock gap up nicely after a superb earnings. This gap up allowed the stock to blast through the old highs which acted as a resistance to the stock.
Whenever a stock gaps up above an old highs because of earnings, this is usually a good sign. First of all, a stock that makes new highs is a good stock. Picture an Olympian winning more and more gold medals. The future looks brights.
Secondly, because new highs are in uncharted territory, there are no resistance overhead caused by sellers who have lost money buying right at the previous top.
Therefore, a stock making new highs is usually a good candidate for momentum trading where traders can buy the stock and hold it for a few days to a few weeks to capitalize on the bullish trend.
Notice how AAPL actually formed a daily ascending triangle. Do not take this chart pattern lightly as they are often a bullish continuation pattern that helps to send a stock higher and higher.
Notice also how AAPL was trading above its rising daily 20 MA and 50 MA. This is a sign of bullishness in the stock.
With a nice bullish environment in the daily charts, let us have a look at the 15 min charts.
If you know that the daily charts are conducive for a bullish trading environment, the next logical step will of course be to look for potential bullish setups in the lower time frames. That is how experienced traders operate. Instead of going into the game blindly, they always look for conducive trading environments.
The above is the 15 min chart of AAPL.
As you can see, there are 2 ascending triangle patterns in the 15 min chart. The first one marked a possible reversal. This is also where a 15 min bullish cross happen to give traders some hint that the short term trend was changing.
The second ascending triangle pattern happen on the day of the gap up. Normally, some stocks will go down to close the gap but in the case of Apple, it formed an ascending triangle towards the end of the day and this told traders that the bullishness is likely to continue as an ascending triangle pattern is a bullish continuation pattern.
The very next day, the stock broke out of this 15 min ascending triangle and rose rapidly to give the trader a nice profit. The stock traded sideways for awhile after that but the fact that it dropped below the 15 min 50 MA hinted to short term traders to book their profits or at least sell 1/2 of their position.
And that is the story of how Apple rose for a few days...
In the world of short term trading, a few days rise can mean a nice juicy swing trade.
Hope that this lesson adds to your growing knowledge of technical analysis!
Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com
Charts with the investing.com logo are courtesy of Investing.com powered by Trading View
Jul 13, 20 07:44 AM
Here is a technical outlook for the US stock market.
Jul 13, 20 07:44 AM
Here is a technical outlook for the KLCI.
Jun 29, 20 08:04 AM
Technical analysis of the KLCI for the month of June 2020. What is likely to happen? Read here.
Jun 29, 20 08:03 AM
Well, sell in May did not materialize for the S&P 500 but the market continues to chugg higher. What is in store for us this month?
Apr 30, 20 07:49 AM
What is the stock market likely to do from this impact of the Coronavirus? Will it continue to fall or a bottom is near. We will use charts to guide us.