Amazon shares have been on a tear, gaining traction to breach record highs on Thanksgiving holiday sales and deliveries. Price has been moving above a rising trend line on the 1-hour time frame and is currently trying to bust through the near-term resistance at $675/share.
Technical indicators are showing that the recent rally might be overdone and that it might be time for a bit of profit-taking. Stochastic and RSI are both turning lower, indicating that selling pressure might pick up. In that case, a pullback to the trend line support may be in order.
Meanwhile, the average directional index is still treading below the 50.0 level which means that ranging market conditions are in play. This could keep Amazon shares moving sideways around its current levels, although the path of least resistance is to the upside since the 100 SMA is above the 200 SMA.
Amazon Shares Outlook
Online retailers like Amazon may have raked in more sales during Black Friday and Cyber Monday this year, as analysts noted that e-commerce activity has picked up during the bargain period compared to in-store purchases. This trend has been observed in the past couple of years, with more shoppers favoring online retail shopping instead of camping out of stores for doorbuster deals.
In addition, the Amazon Prime service also appears to have gained traction due to its more efficient delivery service for customers. This could make a huge contribution to the company’s Q4 numbers, leading up to stronger earnings expectations and a bullish outlook for Amazon shares.
Still, a pullback for Amazon shares to the 100 SMA or the rising trend line at $650-660/share could take place if investors book profits off the recent surge, allowing traders to hop in at better prices and allow the uptrend to carry on. A break below the trend line, although unlikely, could spur a larger correction to the 200 SMA at $640/share.
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