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Apple Inc. (AAPL) H&S Top Pattern

 December 03, 2012 09:52 AM

AAPL is forming the right shoulder of a H&S top reversal pattern. We note high volume on the left shoulder which is typical of the pattern.  The strong uptrend begins to wane as the head forms on less volume and then, finally we confirm the pattern when we observe really weak volume on the right shoulder.  We had a volume spike when AAPL capitulated on Friday November 16th.  Since then AAPL has retraced on declining volume.

We expect the right shoulder to top out in the ambush zone or the blue line which lines up with left shoulder.  After we breach the neckline, we might get a dead cat bounce, followed by a measured move down.  The measured move should be the approx.length of the top to neckline, in this case $200 (705-505).

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