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A Volume Price Analysis Lesson On The Daily Chart For Apple

Published 11/30/2021, 12:40 AM
Updated 07/09/2023, 06:31 AM

Dramatic news concerning coronavirus, coupled with a holiday-shortened week and low liquidity was too good an opportunity to miss for the market makers with indices collapsing as a result, taking stocks with them. But, as I have explained in my analysis of the indices, and also wrote on Friday, this was almost certainly a trapping move and one where we can expect to see indices and stock prices in general rise this week.

One such stock which reversed last week was Apple (NASDAQ:AAPL), but this was signaled ahead of Friday on the daily chart with a classic volume price analysis signal.

Apple Daily Chart

The candle of note occurred on Nov. 22 with the stock price rising to a high of $165.70 before closing the session lower at $161.02 thereby creating a classic shooting star candle as a result.

The associated volume was also high confirming the price action. Such candles with associated volume are always anomalous since, on this type of move, the price should have closed somewhere near the high but it did not, so the conclusion is simple. The market makers are selling into weakness here and we can expect to see this confirmed with either a move sideways or to the downside in due course.

This is a nice example of Wyckoff’s third law of effort and result. If there is a large effort then there should be a large result and result in a day similar to that of the 18th where we have a wide spread up candle on good volume. But, it did not, so what is happening here?

Put simply, nervous buyers late to the party, buy on the fear of missing out (FOMO) and move in strongly on the expectation of higher prices, but sellers are exiting in similar numbers. The market makers themselves are not buying, simply selling into this late demand. The weakness, therefore, when it came was no surprise and with the indices recovering in early trading we can expect to see Apple mitigate some of Friday’s losses.

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