Amazon stock has recently made a huge gap down earlier in the month, plunging from the $360/share levels to the $320/share levels. MACD is still indicating that selling pressure remains, which suggests that Amazon stock could be in for more losses.
Price has dropped below the moving averages, suggesting that a downtrend is in the cards for Amazon stock. The next support area is located at the $290/share level, which is the price lows in May this year. RSI is almost in the oversold zone, which means that sellers are getting exhausted.
A bounce could last until the 50 SMA, which has acted as dynamic support and resistance for the pair. A higher rally could push Amazon stock up to the 200 SMA, which is also a potential inflection point.
Amazon Stock Outlook
A return of buyers could allow the gap to get filled but this appears to be an unlikely scenario in the near term for Amazon stock. Bear in mind that the company has been under scrutiny as it faces opposition from writers and publishers, following the Hachette issue.
Over 900 authors have signed an open letter penned by best-selling author Douglas Preston in dispute. Preston has noted that “These sorts of disputes happen all the time between companies and they are usually resolved in a corporate back room. But in this case, Amazon has done something unusual. It has directly targeted Hachette’s authors in an effort to force their publisher to agree to its terms.”
Further conflict could drive Amazon stock much lower, possibly until the $250/share mark if it results to lower sales for the company. A resolution could lead to a recovery for Amazon stock, yet the downtrend appears to be intact as the 50 SMA continues to move below the 200 SMA for now.
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