On its weekly time frame, it can be seen that Amazon shares formed lower highs and found support around the $290/share level, creating a descending triangle pattern. Price is moving below the 50 SMA, indicating that a potential long-term selloff is possible.
For now though, the shorter-term SMA is treading above the longer-term 200 SMA, which suggests that the uptrend could still resume. Price could draw support from the 200 SMA, which is moving near the triangle support and might act as a dynamic inflection point. A break below this area, however, could confirm that further losses are in the cards.
Amazon Shares Forecast
MACD is in the oversold area, suggesting that buying pressure could pick up soon. In this case, Amazon shares could bounce back to the top of the triangle around the $320/share level, which is also near the 50 SMA. RSI is also hinting at a potential return in buying momentum.
A stronger rally could lead to a break past the triangle resistance and a potential move back to the previous year highs at $400/share. This could hinge mostly on market sentiment and US economic data, which might dictate the Fed’s monetary policy bias.
In the past weeks, increasing odds of a Fed rate hike for later this year have weighed on US equities. This is because the prospect of higher rates and tighter credit could mean more expensive business investment for US companies, thereby limiting their expansion and profitability.
Upbeat reports from the US could further enhance this possibility, which might wind up negative for Amazon shares. Later today, the US retail sales report is due and the headline figure might print a 0.2% uptick while the core reading could come in at 0.1%. Higher than expected readings could revive talks of Fed tightening, which might lead to more losses for Amazon shares.
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