If Apple does this, the shares are in big trouble: Trader

Apple shares are up more than 7 percent this year, but according to one technician, the stock has reached some key technical levels that could suggest losses ahead.

Rich Ross of Evercore ISI said that while Apple is still in an uptrend, previous support at the 200-day moving average is now becoming resistance for the stock.

"Importantly, we broke below that in July and on the rally we failed" to move back above the average line, he said Thursday on CNBC's "Trading Nation."

Even more concerning to Ross is a potential "head-and-shoulders top" forming on the chart, a technical pattern that is seen as a sign of a reversing trend.

Read MoreNike: $12B buyback, dividend hike, 2-for-1 stock split

"We could invalidate that formation on a break above that 200-day, if we take that shoulder out and we can get through this neckline of resistance," Ross said. "But below it the stock remains vulnerable."

Resistance now comes in around $122, he said, and if Apple can break above that level, the stock should be able to continue its recent rally. Apple shares have risen more than 5 percent this week about $119.

However, another failed attempt could mean a lot more trouble for Apple.

"Let's watch this key 200-day moving average to really tip the scales as to the direction of the next big move on this stock," he said.

Want to be a part of the Trading Nation? If you'd like to call in to our live Wednesday show, email your name, number and a question to TradingNation@cnbc.com.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more