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Classic Channel Price Behavior Warned Us About a Correction


Below is what we discussed at noon yesterday. So far, Apple Inc. (AAPL) price action is following classic channel behavior.

AAPL thrust 3%-4% above its upper-channel boundary (100), but has since reversed and declined to test the channel line, and a likely breach and close below 100, on the way to 96.00-93.00 target/buy window thereafter. MJP 9/03/14

My long-standing target zone for the upleg off of the April 2014 low at 73.04 was 101-103, which has been satisfied and exceed (today) with a new high at 103.74.

From the perspective of my channel work, however, Apple Inc. (AAPL) has thrust 3%-4% above the resistance line of entire bull channel created during the past 14 months, which usually constitutes a "channel overshoot warning signal."

Under such circumstances, a channel overshoot in excess of 3% much more often than not increases the likelihood of a reversal that yanks the price structure back below the upper-channel boundary line (now at 100).

With an Apple Media Event scheduled for Sept 9 (new larger iPhones and an iWatch??), my channel analysis might be warning about a pre or post Sept 9 sell-the-news event.

Should such a correction develop, the optimal pull-back support (buy) zone is 96.00-93.00. MJP 9/02/14

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