On its daily stock price chart, it appears that Amazon shares have just completed its corrective wave and may be looking to resume its drop sooner or later. The stock price has pulled up to the $340 level, which is in line with a former support and is around the 200 simple moving average.
With the shorter-term SMA still moving the longer-term one, it appears that the general downtrend can carry on for the next few weeks or months. At the same time, MACD is already hinting at a potential move lower, which means that Amazon stock could follow as well.
RSI, however, is moving above the 50 level. This suggests that selling momentum hasn’t quite taken hold just yet. After all, zooming in to the shorter-term time frame of Amazon shares or looking at the latest pullback reveals a double top pattern which has yet to break below the neckline and confirm the drop.
Amazon Shares Forecast
A break below the pattern neckline, which is around the $325/share levels could indicate that sellers are ready to push prices lower. If that happens, Amazon shares could trade down to the previous lows at the $290/share mark.
On the other hand, a strong bounce from its current levels could mean another test of the previous highs at $340/share and possibly a formation of a triple top chart pattern. Stronger rallies could lead to an upside break of this resistance and a potential climb up to the actual 200 SMA levels.
The odds for a downside move are considerably higher though, as Amazon’s Firephone failed to impress many industry analysts. Many expected Amazon shares to rally after the company announced what could’ve been a rival to Apple’s iPhone or Samsung’s smart phones, but the disappointment kept Amazon shares weak.
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