Amazon shares had been trending higher but price failed in its last two attempts to break past the $580 resistance, creating a double top pattern. Price is on its way to test the neckline support at $550 and a break below this level could spur a downtrend.
For now the 100 SMA is above the 200 SMA so the path of least resistance is to the upside, possibly allowing the $500 support area to hold. If so, another test of the $580 resistance could take place or perhaps a break above it.
Stochastic is indicating oversold conditions with a bullish divergence, as price made higher lows while the oscillator had lower lows. RSI is starting to make its way out of the oversold area to show that buyers are regaining control.
The continued risk-on environment could keep Amazon shares afloat since the prospect of low borrowing costs from the Fed could keep lending and spending activity supported. This would be positive for consumers, businesses, and investors so equities could hold on to their gains and go for more from here.
However, Amazon shares have been unable to make much headway on reports that Apple favored Google’s cloud network versus Amazon’s Web Services offering. Apple is spending between $400 million and $600 million on Google Cloud Platform and has since greatly reduced its reliance on Amazon.com’s cloud computing services while remaining a customer.
In addition, Google is attempting to poach Spotify away from Amazon in offering additional features to help the music-streaming company to fine tune its user listening recommendations, thereby putting a threat to revenues of the company.
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