AAPL AMZN NFLX MU Trendline Action
I was looking at stocks on the weekly timeframe and noticed several tech stocks that could be in the late stages of bull moves, judging by the slope of their ascent on the linear scale of weekly charts. I have no idea when this will end, and when it does end I don't know if it will just signal mild consolidation on these individual stocks or more extended pullbacks. I'm just preparing for signals that could indicate nice short swings. Until then, I will not be betting against a raging bull tech stock.
*****I use solid trendlines in the charts for log scale view, and dotted-lines for linear scale. If you are looking at the trendlines without their appropriate scale selected they will not make sense. Also, I drew the lines using candle wicks/bodies on the weekly timeframe, so they will appear slightly off on the daily timeframe.*********
AAPL has broken above and backtested a log trendline in blue that acted as resistance since Sept 2012, and is now continuing higher. The black uptrend line acting as support for its recent moves has been in place since Jun 2016. On the linear scale, the dotted-blue trendline is the most recent line acting as support on the weekly, and because it is so steep, I will be looking to enter a short if it breaks.
AAPL log scale :
AAPL linear:
AMZN has well-defined boundaries when looking at the linear scale on the daily timeframe. The top and bottom boundaries have been in place since April 2018, and it was never able to close above or below until recently when it closed above but wasn't able to confirm the candle on the following day. Now, it has pulled back with a large amount of bear volume. If we get a close below the lower boundary, I will look to enter short.
AMZN linear scale:
NFLX gave a great signal for short entries in July when it broke below the steep dotted-blue uptrend line on the daily timeframe from April of this year, gapped below it, backtested it, and continued lower. It still has a nice black uptrend line on the weekly log scale chart that has been in place since mid-2016. I will look for potential long entries if we backtest it. If it doesn't hold, then the dotted-pink trendline on the linear scale could provide a nice entry point for long positions. It has provided support since 2016.
NFLX log scale:
NFLX linear scale:
MU gave a great signal for short entries, but unfortunately I didn't look at the chart until yesterday. The weekly timeframe on the log scale had a broadening wedge that broke bear, retested the trendline, and has since continued down. Currently, it is attempting to hold the dotted-pink trendline on the linear scale weekly timeframe that has provided support since May 2016. I may look for long entries for a short-term bounce from this level since we have an oversold RSI on the daily and 4h timeframes, since the huge volume yesterday could be a climax to indicate a short-term reversal, and since the trendline aligns with a large price-congestion zone from late 2017. I need to see the S&P500 show some short-term bullish action before I can be confident that MU will start a convincing bounce. After that, I will look to enter a small short position on a daily lower high compared to 53.68, and will add to it if we break below the pink trendline on the linear scale.
MU log scale:
MU linear scale:
******Remember, breaking above a declining trendline is by itself not a good indication to initiate long positions, and breaking below a rising trendline is by itself not a good indication to initiate short positions according to traditional technical analysis. This is because the break of a trendline could just indicate a slowing of a trend, and a previous higher low pattern could still be maintained in the case of an uptrend, or previous lower high pattern could still be maintained in a downtrend. However, combining the breaking of a trendline with other factors (like NFLX's gap down on huge volume or MU's retest and rejection from its previous uptrend line) can give signals for entering positions. For a great explanation of these ideas, check out recent editions of "Technical Analysis of Stock Trends" by Edwards/Magee, Chapter 29 "Trendlines In Action." ********
*****I use solid trendlines in the charts for log scale view, and dotted-lines for linear scale. If you are looking at the trendlines without their appropriate scale selected they will not make sense. Also, I drew the lines using candle wicks/bodies on the weekly timeframe, so they will appear slightly off on the daily timeframe.*********
AAPL has broken above and backtested a log trendline in blue that acted as resistance since Sept 2012, and is now continuing higher. The black uptrend line acting as support for its recent moves has been in place since Jun 2016. On the linear scale, the dotted-blue trendline is the most recent line acting as support on the weekly, and because it is so steep, I will be looking to enter a short if it breaks.
AAPL log scale :
AAPL linear:
AMZN has well-defined boundaries when looking at the linear scale on the daily timeframe. The top and bottom boundaries have been in place since April 2018, and it was never able to close above or below until recently when it closed above but wasn't able to confirm the candle on the following day. Now, it has pulled back with a large amount of bear volume. If we get a close below the lower boundary, I will look to enter short.
AMZN linear scale:
NFLX gave a great signal for short entries in July when it broke below the steep dotted-blue uptrend line on the daily timeframe from April of this year, gapped below it, backtested it, and continued lower. It still has a nice black uptrend line on the weekly log scale chart that has been in place since mid-2016. I will look for potential long entries if we backtest it. If it doesn't hold, then the dotted-pink trendline on the linear scale could provide a nice entry point for long positions. It has provided support since 2016.
NFLX log scale:
NFLX linear scale:
MU gave a great signal for short entries, but unfortunately I didn't look at the chart until yesterday. The weekly timeframe on the log scale had a broadening wedge that broke bear, retested the trendline, and has since continued down. Currently, it is attempting to hold the dotted-pink trendline on the linear scale weekly timeframe that has provided support since May 2016. I may look for long entries for a short-term bounce from this level since we have an oversold RSI on the daily and 4h timeframes, since the huge volume yesterday could be a climax to indicate a short-term reversal, and since the trendline aligns with a large price-congestion zone from late 2017. I need to see the S&P500 show some short-term bullish action before I can be confident that MU will start a convincing bounce. After that, I will look to enter a small short position on a daily lower high compared to 53.68, and will add to it if we break below the pink trendline on the linear scale.
MU log scale:
MU linear scale:
******Remember, breaking above a declining trendline is by itself not a good indication to initiate long positions, and breaking below a rising trendline is by itself not a good indication to initiate short positions according to traditional technical analysis. This is because the break of a trendline could just indicate a slowing of a trend, and a previous higher low pattern could still be maintained in the case of an uptrend, or previous lower high pattern could still be maintained in a downtrend. However, combining the breaking of a trendline with other factors (like NFLX's gap down on huge volume or MU's retest and rejection from its previous uptrend line) can give signals for entering positions. For a great explanation of these ideas, check out recent editions of "Technical Analysis of Stock Trends" by Edwards/Magee, Chapter 29 "Trendlines In Action." ********
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