AMAZON ($AMZN) is showing a consolidation in weekly chart
AMZN’s earning report will be out in a month. Precisely on 26th October 2017. While waiting for it , let us see the technical chart suggestion with price action analysis.
As explained in the introductory post for Price action analysis let us find the key points in our checklist. Even though we kept the trend line and price channel as the 4th key point, we will club it with the Trend direction. So let us start with our DLS (Direction, Levels, Setups) analysis.
What is the current trend direction of AMZN?
Let us go through three time frames.
Monthly Price action chart of AMZN
Monthly chart shows it is in a steep up trend. No doubt about that. It is making higher highs and higher lows consistently. But there is a clear indication in the same chart. We will see it in our “Price action set ups” analysis.
Weekly chart of AMZN
Weekly chart says AMZN is a bit exhausted of the long rally and trying to consolidate. Just like in monthly chart, there is a clear indication of consolidation or side ways moves.
Daily chart of AMZN
Daily chart shows it has already in a down trend. It has made a lower low and lower high. Now it is bouncing from the previous support. According to daily chart, there are two possible moves, a breakout from trend line or reversal.
If it breaks the down trend line, it can go up and test the 1000 levels.
Direction in monthly is consolidating, in weekly it has broken support trend line and in daily it is bouncing from the nearest support.
Important levels of AMZN
Now the L part of DLS. The important levels we will consider only in daily chart for short term.
Support : 936
Resistance : 963
Set ups and patterns
There are indications for a down trend in all three time frames. In monthly chart, it has created a pin bar in July and weekly chart, last week of July made a clear pin bar.
In daily chart, it is making a descending triangle pattern.
How does the descending triangle pattern reacts usually? Explained in next picture.
Yes, when it breaks the support, it dives to lower levels.
So what we can expect in AMZN?
- In near term, it may bounce back to 960 levels and come back. If it breaks the support at 930s, it will be heading to 880 levels.
- If it breaks the 960 resistance, it can go up and re test the previous high of 1000 levels.
- If this does not happen, Price will be toggling inside a range for a long term. It can continue like that for months.
AMZN Live chart