Apple (AAPL) Triggers Head And Shoulders Pattern, Here Is The Target
Shares of Apple Inc. (AAPL) experienced a significant sell-off over the past week, plummeting by more than 10%. This sharp decline has caught the attention of technical analysts, who suggest this could be the beginning of a more substantial correction for the tech giant's stock.
A key bearish pattern, known as a head and shoulders, has been identified on Apple's chart and has now been triggered. This formation is a classic technical indicator that often signals a shift from an uptrend to a downtrend, suggesting considerable downside potential. The pattern is characterized by a peak (the left shoulder), a higher peak (the head), and another peak roughly equal to the first (the right shoulder), all followed by a break below the support level known as the "neckline."
In the case of Apple, the head and shoulders pattern was confirmed when the stock price closed below the neckline, which is located around the $220 price level. Once this neckline is breached, technical analysts can estimate a potential price target by measuring the vertical distance between the peak of the head and the neckline, and then projecting that distance downwards from the breakout point.
Applying this methodology to Apple's chart, the head and shoulders pattern projects a potential downside target of approximately $180 per share. This represents a significant potential decline from current levels and underscores the bearish sentiment surrounding the stock based on this technical analysis.
It's important to remember that stock prices rarely move in a linear fashion. Therefore, investors should anticipate potential temporary bounces or periods of consolidation in Apple's share price in the coming days or weeks. These counter-trend movements are normal within a larger trend. However, according to this technical analysis, as long as Apple's stock price does not close back above the broken neckline at $220, the bearish implications of the head and shoulders pattern, and the downside target of $180, are expected to remain in effect.
