After bouncing off long-term support a few days back, Amazon stock may soon be in for another drop as it is currently testing a short-term resistance level. As you can see on the daily chart, price is stalling around the 50 simple moving average, which has acted as a dynamic inflection point in the past.
Price could still make its way up to the 200 SMA, which might also hold as near-term resistance. After all, the shorter-term SMA is moving below the longer-term SMA, indicating a downtrend for Amazon stock.
Amazon Stock Forecast
A selloff from the current levels could mean a move back to the key support zone at $290/share, which has held as a floor in the previous months. An upside break past the 200 SMA, however, could be an early signal of a long-term reversal and rally for Amazon stock.
Much could hinge on the outcome of the FOMC announcement this week, which might be a key driver of price action among US equities. Any hints of potential tightening seem to have had a negative impact on stocks, as this would mean tighter credit and more expensive investment later on.
Weak inflationary pressures have been keeping the US central bank cautious and it’s likely that they could retain this same tone in their upcoming policy decision. If so, Amazon stock could continue its ascent and possibly test the 200 SMA resistance around $320/share. On the other hand, hawkish remarks might lead to increased speculations of Fed tightening, which could force shares to return their recent gains.
Another potential mover for US equities is the ongoing snowstorm in the northeast part of the country, as some speculate that this could have negative repercussions on hiring, spending, and growth. While the impact might be limited to the short-term, investors are worried that a repeat of the economic slowdown brought forth by extreme weather conditions in early 2014 might be possible.
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