Apple has formed a bearish head and shoulder pattern clearly visible in weekly timeframe. Right shoulder has fallen in 5 waves as you can see in the chart. And the stock seem to have completed zigzag ABC correction. 5 waves impulse down in a confluence that this H&S might break down.
As per EW counts, there are 2 possibilities in my (bearish) view.
- ABC correction is done and the red bars following C is wave 1 of next impulse down which would eventually break the neckline.
- Correction is still ongoing and the ABC correction might turn into something more complex but it would eventually complete and then impulse down would start. This means it would consume more time before the pattern plays out.
Typically we take the height of head for estimating but even if I take the height of right shoulder, it gives a serious downside of 20% or more.
Note that I have only considered bearish alternatives here.
