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Why This Technician Thinks That Apple Inc. (AAPL) Will Go Up To $143?

Apple Inc. (NASDAQ:AAPL) has started taking pre-orders for its much anticipated Apple Watch on Friday. While many expect that Apple Inc. (NASDAQ:AAPL)’s smartwatch might not be able to move the needle for them, many others expect that the device will be a hit among consumers. Meanwhile, a technician says that Apple Inc. (NASDAQ:AAPL) is going to reach $143. Richard Ross of Evercore ISI talked on CNBC’s Trade nation on Friday about why he thinks that Apple Inc. (NASDAQ:AAPL) can reach $143.

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Ross said that Apple Watch doesn’t have a spring, but he said that Apple stock trend has a spring wound in it to propel the stock higher. He pointed out that first thing to note in Apple’s stock trend is the well-defined uptrend the stock had for few years. Since its low in 2013, Apple stock value has almost doubled.

Ross talked about a pattern which he thinks will propel Apple’s stock higher. He called the pattern as coil or a triangle. Apple was trading around $110 during the beginning of the year and has started to move up and touched $132 towards the end of February. Post this high the stock started dropping few dollars and is currently consolidating around $125 level. Ross said that this move up and consolidation has formed a triangle in the trend. He mentioned that according to good books of technical analysis, Apple’s volatility contraction with higher low’s and lower high’s has wound the spring tighter within the triangle. He feels that the energy stored inside the triangle will release the stock in the upward direction.

He pointed out that the high and low of triangle covers around $17 and adding that to $126, which Apple Inc. is currently trading at, would position the stock at $143.

“The pattern I am talking about is actually called the coil or a triangle. […] Big move up in to the recent pattern (From beginning of 2015 to end of February), but then volatility was contracting within this triangle. [..] The good book of technical analysis tells that, Apple consolidates and that volatility contradicts when you see this pattern of lower highs and higher lows. That’s the spring being wound very tightly. Now all that energy that is being stored is ultimately released higher. Now this pattern is not only great but directional which tells we should get a break out in the direction of pattern [..] Which is from low to high. But it gives us a nice measuring tool as well. Essentially we are taking the height of the pattern, which in this case [..] is about $17 to $18. [..] We tag that $17 on to the height of the pattern. We project that higher [..] brings us up to $143,” Ross said.

Ross said that he will be a buyer of the stock into the apple watch release and out of it. He said he would suggest people to buy the stock.

Disclosure: None

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