Apple, Inc (NASDAQ:AAPL), Walt Disney Co (NYSE:DIS) and Robinhood Markets, Inc (NASDAQ:HOOD) are all trading higher in strong uptrends. 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 often 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 prints a lower low indicating a reversal into a downtrend may be in the cards.
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The Apple Chart: Apple reversed course into an uptrend on Jan. 24 and has made one higher high and one higher low to confirm the trend. On Friday, Apple may have printed its next consecutive higher low at the $170.68 level.
- Apple may also be settling into a bull flag pattern on the daily chart with the pole created between Jan. 24 and Feb. 2 and the flag forming over the days that have followed. If the pattern is recognized, traders can watch for the stock to break up from the flag on higher-than-average volume.
- Apple has resistance above at $174.33 and $177.71 and support below at $171.03 and $167.88.
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The Disney Chart: Like Apple, Disney reversed course into a possible uptrend on Jan. 24 and the stock looks to have printed its first higher low within the pattern. If the trend is to continue, Disney will need to print a higher high above the Feb. 1 high of $144.69.
- On Jan. 24, Disney filled a lower gap between the $128.66 and $133.86 range that was left behind on Nov. 9, 2020, which may give bulls more confidence going forward because gaps on charts fill about 90% of the time.
- Disney has multiple gaps above the current share price which are also likely to fill, with the closest gap between. $144.69 and $147.15. If the stock rises up to fill that gap, Disney will gain almost 5%.
- The stock has resistance above at $141.70 and $147.85 and support below at $137.14 and $132.38.
The Robinhood Chart: Robinhood looks to have reversed course into an uptrend when it hit an all-time low of $9.94 on Jan. 28 and on Thursday the stock may have printed the first lower high within the pattern.
- The stock may also have recently broken up from a long-term descending trendline that has been holding it down since Nov. 19, 2021.
- Robinhood is attempting to break up over the 21-day exponential moving average and if the stock can regain the level as support, the eight-day EMA will eventually cross above the 21-day, which would give bulls more confidence going forward.
- Robinhood has resistance above at $17.08 and $19.89 and support below at $12.77 and the all-time low.
