AAPL and Head Fake Moves...

In last night's post I tried to give you a couple examples of head fake moves and how a failed move creates a fast move in the opposite direction and thus the reason we see head fake moves so often before a reversal, granted we are looking at an intraday chart, but the concept is the same.

 First, we typically see this kind of action in reversals whether intraday or daily, when we see a long lower wick candle (a rejection of lower prices) on heavy volume (with the caveat that it must be in an established downtrend which we have on an intraday basis here), it almost always is a washout and turns in to a reversal; that's just a side note.

Here's the AAPL triangle that the longs would have certainly bought as a bullish continuation pattern, this morning's move outside of that triangle would have brought in more longs, the failure of the breakout sent AAPL plummeting and this is the idea of a head fake move, of course the longer it lasts, the longer the time frame, the more powerful and meaningful it is. It looks like we just got a shakeout of the longs which Wall Street could be using to accumulate shares for the daily upside head fake breakout I suspect we will see as per Friday's and last night's post. We now have a relative positive divergence at the white arrow in AAPL on a 5 min chart (the longer the timeframe, the stronger the divergence).

Take a look at the volume on the breakout and then compare with the volume on the first chart above as AAPL declined.

So here is yet a 3rd example in the last week of what a head fake breakout can do and why they are important to add fuel to the downside fire.