Apple's Shares Are Bitten By China's Actions: What Investors Need to Consider

Shares of Apple (AAPL) are trading lower Wednesday perhaps in reaction to reports that China has ordered its government agencies to stop using iPhones at work. I don't know how this U.S. vs. China "tit for tat" diplomacy will play out so let's check the charts and indicators.

In the daily Japanese candlestick chart of AAPL, below, I can see some reasons to be concerned. Prices have rallied back to fill part of a downside price gap from early August but not all of the gap. I consider this a sign of weakness as sellers of AAPL stepped in to liquidate shares before reaching what I would consider chart resistance -- the top end of the price gap.

Notice the doji pattern the other day? And then the small real body on Tuesday? A bearish or red candle today (Wednesday) could be considered a top reversal. Prices are above the 50-day moving average line but that may not last long. The slope of the 200-day moving average line is positive.

The On-Balance-Volume (OBV) line has moved up from mid-August to its prior high at the beginning of August so it could be a double top. The Moving Average Convergence Divergence (MACD) oscillator has improved to the underside of the zero line -- a convenient place for it to stall.

In the weekly Japanese candlestick chart of AAPL, below, I see a setup that could spell further weakness. AAPL could be making a top reversal pattern but we need to see a bearish candle this week. The slope of the 40-week moving average line is positive but this is a lagging indicator.

The weekly OBV line is back to its July high but it has not broken out to a new high. The MACD oscillator is in a correction or a take profits mode.

In this daily Point and Figure chart of AAPL, below, I can see that the software is projecting a downside price target in the $149 area.

In this second Point and Figure chart of AAPL, below, I used weekly price data, which also suggests the $149 area as a price target.

Bottom-line strategy: Apple can be a leader on the upside but that also means it can be a leader on the downside --  similar to Nvidia (NVDA) . Traders who are long AAPL should consider protecting those positions.

Employees of TheStreet are prohibited from trading individual securities.