Apple, Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and Tesla, Inc (NASDAQ:TSLA) all appear to be reversing into uptrends, although they have yet to be confirmed. An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.
The higher highs indicate the bulls are in control, while the intermittent higher lows indicate consolidation periods. Traders can use moving averages to help identify an uptrend, with rising lower-timeframe moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend and rising longer-term moving averages (such as the 200-day simple moving average) indicating a long-term uptrend.
A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows frequently take place at resistance and support levels.
In an uptrend the "trend is your friend" until it’s not, and in an uptrend there are ways for both bullish and bearish traders to participate in the stock:
- Bullish traders who are already holding a position in a stock can feel confident the uptrend will continue unless the stock makes a lower low. Traders looking to take a position in a stock trading in an uptrend can usually find the safest entry on the higher low.
- Bearish traders can enter the trade on the higher high and exit on the pullback. These traders can also enter when the uptrend breaks and the stock makes a lower low, indicating a reversal into a downtrend may be in the cards.
See Also: Why Apple Shares Are Rising
The Apple Chart: Apple reached a bottom on Dec. 20 at the $167.46 mark and reversed course, rising over 7% since that date.
- The stock will need to eventually confirm the uptrend by printing a higher low.
- Consolidation under the previous Dec. 13 all-time high of $182.13 could propel Apple into a blue-sky run.
- There is resistance above at the all-time high and support below at $174.33 and $170.30.
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The Microsoft Chart: Microsoft also reversed course on Dec. 20 after printing a bullish double bottom at the $317.25 level.
- Like Apple, Microsoft will need to eventually print a higher low to confirm the uptrend.
- Microsoft has resistance above at $343.78 and $349.67 and support below at $339.86 and $335.30.
The Tesla Chart: Tesla has soared up over 25% higher since hitting a bottom on Dec. 21 at the $886.12 mark.
- Tesla will also need to eventually print a higher low, which may give bullish traders an opportunity to buy shares or call contracts for another bullish move higher.
- Tesla has resistance above at $1,152.62 and $1,201.95 and support below at $1,075.02 and $1,045.02.
Related Link: BZ Chart Of The Day: Is SPY Breaking Out?
