Let’s take a look at AAPL to see if price action has anything to say about the direction of the markets in the days and weeks ahead. Our Elliott Wave count is labeled with a wave (1) top of a multi-year run higher for Apple. Price action has corrected lower in a 3-wave move that we have labeled as the a-wave. That wave certainly looks corrective and suggests that there is more upside in the years ahead after this correction is complete. For now the 3-wave move lower can not be considered complete yet, but the correction needs another 3-wave move lower. So we need to identify where this correction is going to end. With the a-wave complete, and price action is now working on the b-wave higher into the 50% retracement level of 582 and the 61.8% retracement level of 596, we should see a reversal in the very near term for another 3-wave move lower for the c-wave. Once the c-wave lower completes, the (2) wave will be considered complete as well.
We are focusing on two levels for this wave c of (2) to target. The first level is where the top of the long-term trend channel comes in at about the 475 level and the 100% fib projection level of 467. So this support zone of 475-467 is our first area of support that we will be watching. The second level is where the 161.8% fib projection level of 390 is and the 50% fib retracement of 361 is located. So this support zone of 390-361 is our second area of support that we will want to pay close attention to if the first area of support is broken. We have highlighted the two areas of support in the chart below. Also notice that the RSI indicator only just beginning to back off of very overbought conditions. Once the trend line is broken there we should see some momentum for price action to the downside.
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