Amazon Shares to Rally on Upbeat Earnings?

Amazon Shares to Rally on Upbeat Earnings?

Amazon Shares to Rally on Upbeat Earnings?

Amazon shares have been trending higher, moving above an ascending trend line on the 1-hour time frame. Price is actually testing this trend line now and is drawing support from the 38.2% Fibonacci retracement level, which coincides with the 200 SMA.

The 100 SMA is above the longer-term 200 SMA so the uptrend is likely to carry on. In that case, Amazon shares could climb back up to the swing high at $634 or beyond. A larger correction could still find a floor at the next Fib levels of $585 and $575.

Stochastic is on the move down so sellers might still be in control. RSI is also heading south so Amazon shares could follow suit. However, the company’s latest earnings report has shown impressive results so a gap higher could be possible.

Profit and revenue for the first quarter beat analysts’ expectations, buoyed mostly by strong performance in its cloud division. This marked the company’s fourth straight quarterly earnings beat.

Profit came in at $513 million, twice as much as what analysts predicted, while sales surged 28% to $29.1 billion. Web services contributed a 63% jump to $2.6 billion, thanks to its hosting of Netflix, Airbnb, Yelp, Expedia, Major League Baseball and Slack. Retail and media also contributed positively to gains while shipping costs surpassed the $1 billion mark once more, keeping investors on watch about any potential adjustments in this regard.

Zooming out to longer-term time frames shows the next major resistance at $680 then at $700. This could potentially invalidate the head and shoulders uptrend reversal pattern that hasn’t been completed on the daily time frame.

Earnings per share landed at $1.07 versus expectations at $0.58. Stock market gains were limited on downbeat remarks from investor Carl Icahn and weaker than expected US advance GDP, which revealed that the economy grew by only 0.5% in the first quarter instead of expanding by the projected 0.7% figure.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.