Interactive Investor

Chart of the week: should you buy or sell Apple shares?

19th April 2022 12:29

John Burford from interactive investor

After getting it right on Apple shares last time, here’s what technical analyst John Burford believes will happen to the world’s biggest company now.

Is Apple about to report disappointing earnings?

Apple (NASDAQ:AAPL) is one of the most important tech companies globally and is a member of the famous 'FAANG gang' that has been a major focus of investor attention for some time. These US companies have defined the global growth sector for many years, but the question must be asked: can Apple maintain its dominance in its field, given that the mobile-phone market is very mature with competition rife.

In recent years, it has ventured into services with its Apple Pay, iCloud and several other services. And the growth here has been nothing short of stunning, with Q4 services revenue up 24%.

And that has kept Apple shares aloft just when it appeared that it had run out of steam in Q1. With visions of a rumoured self-driving electric vehicle in the works and a new computer headset said to be announced soon, the shares have recovered from the $150 low on 14 March.

In fact, this decline to the low was suggested in my COTW of 7 February. This is the chart I posted then:

Past performance is not a guide to future performance.

My forecast was for a wave down to take the shares below the wave 1 low at $155. And if/when that occurred, the big test would be to observe a move sharply lower or to find support and advance.

This is the updated chart:

Past performance is not a guide to future performance.

As forecast, the shares moved lower and broke below my first target at the wave 1 low at $155. But they found major support at the $150 low and began a strong advance, taking them to the $180 high in late March.

This month, investors have been looking forward to the 28 April earnings report for Apple’s second fiscal quarter (first calendar quarter) of 2022, with the shares selling off to the current $165 area.

Note that $165 is at the Fibonacci 50% retrace of the prior wave off the $150 low. This is a major area of support. It also touches the downtrend line in a potential kiss and sharp bounce up. It should support a move higher from around here.

But if that support gives way, the path is clear for a test of the major line of support around the $152 level.

John Burford is a freelance contributor and not a direct employee of interactive investor.

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