On Friday last week, Amazon Inc. (NASDAQ: AMZN) broke through its medium-term upside support line drawn from the low of the 4th of April and continued traveling south from there onwards. Yesterday’s big stock-market hit forced Amazon to close the day with a 6.15% loss, where the share price dropped to levels last seen in July. Given that the bears seem to be in control for now, we will aim for lower levels, at least for the short run.
Amazon Inc. closed below its key support zone near the 1765 level, marked by the lows of the 20th and the 27th of July, which also acted as the high of the 20th of June. Just 30 dollars below that level lies another potential area of support at 1735, which held the price from dropping lower on the 31st of July. If this time, the area is not able to withstand the bear-pressure and the share price moves below it, this is where we could get even more comfortable with the downside scenario over the near-term. A further decline could lead towards a test of the 1680 obstacle, a break of which could end up pulling the stock all the way to the 1645 barrier, marked near the lowest point of June. Let’s not exclude a possibility for Amazon to retrace back up a bit, potentially hitting the 1830-dollar price tag and then falling towards the levels discussed above.
Our oscillators, the RSI and the MACD, are currently pointing to the downside. In addition to that, the RSI is still below 50 and seems to be aiming towards the 20 area, and the MACD is below zero and the trigger line. Both indicators are in support of the idea discussed above.
In terms of the upside, for a more confident view of the Amazon stock moving higher, we would need to see the share price pushing back up, not only above the aforementioned medium-term upside support line, but also closing above the 1955 hurdle. That hurdle acted as the inside swing high of the 21st of September. Only if the stock moves above 1955 we could aim back at the highs that we saw during the first days of October and September. In more specific terms, the first potential resistance to watch, after a possible break of the 1955 level could be the 2032 area, marked by the high of the 1st of October. Slightly above, sits another possible resistance zone at 2050 that held the price down on the 4th of September. Further acceleration of the price could place the Amazon stock into an uncharted territory.
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