Last month, Apple (AAPL​) released its new iPhones and a refresh for the Apple Watch. The stock fell following the announcement due to worries over supply issues for the iPhone X, as well as reports of smaller-than-expected lines for the iPhone 8 when it was released.

Shares have underperformed the market over the last few weeks and are down six percent since the start of September vs. a gain of three percent for the S&P 500. But now the stock has started to rebound a bit as we get closer to the company's fiscal fourth-quarter earnings report in a few weeks as a number of technical signs show that shares are  poised to rally more into the news.

First, there seems to be a momentum shift in the stock. We can see this by watching the Moving Average Convergence Divergence (MACD​). When there is a reversal in this technical indicator, it is a sign that momentum has shifted from negative to positive. Secondly, we can look at the Directional Movement Index (DMI), which uses a positive directional indicator (+DI) and a negative directional indicator (-DI). Like the MACD, when the positive indicator crosses above the negative indicator, it is a sign that momentum is shifting from negative to positive. Over the past few months, when both the MACD and DMI have seen reversals from negative to positive, Apple's stock has rallied in the weeks following. We see the first example in the beginning of June and the second in the beginning of August after the company's last earning report.

Source: Tradingview.com

The next technical sign to watch is the $154.50 level. This was the level Apple stock held after its last earning report and one it successfully reclaimed last week. If shares can hold above that level and maintain a positive MACD, it is more likely for the stock to rally over the next few weeks. Holding this support level will give traders a level to trade against as well as affirmation of strong demand for the stock. The first price target would be $158, the level where Apple started to break down after September's iPhone event, and then the following target would be the all-time-high of $164.

The Bottom Line

As Apple makes a comeback from its September sell-off, a few technical signals point to shares continuing to rally. Watching momentum indicators such as the Moving Average Convergence Divergence (MACD) and the Directional Movement Index (DMI), as well as key support at $154.50 will help determine where the stock goes next.

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