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Graphics created by the writer of OvalX
In this article, we will look at Apple news (NASDAQ:AAPL) supply chain issues and how that is reflected in the tech giant’s share price performance. Before You Contact Apple Technical Service structure, we’ll dig into news from both China and Apple itself before trying to gauge where this equity might end next.
The Chinese city of Zhengzou, also known as “iPhone City”, is approaching its third month due to an outbreak of Covid 19 and Apple’s supply chain is also suffering.
On November 6, in a rare press release, Apple warned of “significant disruption” ahead of the holiday season and as China opted to ease its protracted and very strict bid to eradicate Covid 19. rather than manage it, a perfect storm appears to have brewed for the US tech giant as workers running the supply chain fall ill with the virus.
A fifth of the iPhones produced are sold on the Chinese market, but it is far from being balanced in terms of supply since more than 90% of the iPhones are assembled in the country.
The Chinese government’s apparent mismanagement of its Covid 19 policies is starting to have a direct impact on the world’s digital darling, but is this just a temporary glitch or a more worrisome case?
In June, I issued a sell signal for Apple with Seeking Alpha with $129 as the key support level that this equity is looking to circumvent.
If we move to the chart below, we can see a close-up of the bearish wave one two pattern. An initial high at $183 in January saw a drop to $148 in March, forming the first wave. With the last price level being reached, this also created the second wave of bullish candles which allowed the third wave to form and drop to new southern pastures at lower levels.
Apple monthly chart (OvalX)
The Fibonacci 161 was the next stop in the region of $129 which was then reached in June. Apple almost attempted to break higher and return the bearish wave of this price region with a huge buy until the Jackson Hole speech was released in August and since then Apple has been hanging onto a bullish setup potential of the Fibonacci 161 which finally faded as the holiday season approached.
So let’s examine where the next technical stop might be in terms of price assuming there is a clear break below the $129 region.
It is one of the defining rules in my book “The Ward Three Wave Theory” that a financial market should look for its third wave to digitally replicate its first wave. If that holds true in Apple’s case, then $115 is where that equity should be headed next.
We can see in the chart below that $115 is the Fibonacci 200 of this structure, if this price is to be reached then we can consider it to be a bottom by looking for three bullish wave patterns that can form on the lower periods. It is only when three wave patterns complete each other upwards from the daily, weekly chart eventually leading to the monthly chart, that we have some form of certainty that a bottom in that price area can form. With failing bullish wave patterns climbing through the time frames, it will be the Fibonacci 261 that all eyes will be on below $100; but as we speak, we are a number of steps away from analyzing this scenario.
Apple monthly chart (2) (OvalXApple)
As a final note, I would expect Apple to end at $115 in the next 30-120 days, a strong breakout of $129 will go a long way in increasing the likelihood of this as it’s also plausible that the stock price please just drop slightly lower from here only to reposition and form a new wave pattern going north. If $115 is reached, I will look for bullish wave patterns as mentioned and post an updated article if so.
About the Three Wave Theory
The Three Wave Theory was designed to be able to identify the exact probable price action of a financial instrument. A financial market cannot go up or down significantly without making waves. Waves are essentially a mismatch between buyers and sellers and imprint a picture of a likely direction and target for a financial instrument. When waves one and two have formed, it is the high high/low low point that gives the technical indication of future direction. A wave one will continue from a low point to a high point before finding a large enough release to then form wave two. When a third wave breaks into an upper/lower trough, the only likely numerical target rollover available on a financial chart is the equivalent of wave one’s low to high point. It is highly likely that the third wave will seek to digitally replicate the first wave before making its future directional decision. It may continue beyond its third wave target, but it is only evidence from a single wave that a price was able to continue before rejection that can be considered a likely target for a third wave.
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