Has Amazon Stock Topped Out Right Now?
Data coding method: (AMZN) recorded a bearish outside day on Thursday, falling an all-time high at $ 1,763.10. Higher-than-average sales volume predicts even lower prices or a consolidation pattern in the coming weeks, following an impressive rally that has added 125 points since a break above two-month resistance at $ 1,630. Top selectors will closely watch the short-term price action, looking for signs that the latest trend advance has run its course.
The internet giant and the tech sector have provided a safe haven for capital coming out of stocks vulnerable to a trade war, but positioning may be out of place. Management’s efforts to end the theft of Chinese intellectual property could bring technology stocks to the line of fire, ending the Nasdaq 100 breakout to an all-time high. Amazon already faces headwinds from tariff margins and could run into additional hurdles with its China-based operations.
It will probably take months or more after the final rally to proclaim a long-term downtrend in Amazon shares, but we can apply two technical methods to measure risk versus reward from new positions. The first technique uses a simple measured motion calculation, examining the previous consolidation pattern, while the second applies a Fibonacci extension to locate the hidden harmonic resistance.
Method #1-measured movement
The stock broke the top of a six-year upward channel in January 2018, setting support that has now centered near cerca 1,350. That level also marks the swing low of a two-month Cup and handle pattern formed after the stock turned lower above marzo 1,600 on March 13. Technicians project possible upward targets after the cup and handle the shoots by taking the depth of the cup and adding it to a new support at the break level.
The decline in April registered 264 points down ($ 1,617 – $ 1,353 = $ 264), and adding this number to March’s maximum yields 1 1,881, or 120 points above Thursday’s all-time high. In turn, that predicts the current rally wave is halfway through. Of course, bullish trends rarely develop in a straight line, so it is possible for the stock to pull back and test new support before mustering the buying power needed to challenge the measured movement target.
Method #2 – Fibonacci extension
Market technicians can identify harmonic turning points through Fibonacci extensions, which use the same price changes as the measured movement method to project the potential strength of a rally. The initial high forms the first point in this process, while the low swing generates the second point. The relationships of this number are built on the breakout support to find hidden resistance levels.
The cup and the break of the handle generated a six-day rally that stalled in the .382 Fibonacci extension on June 6. The stock retreated for three sessions and Rose, surpassing that level on June 14. He invested again in the .50 extension, which marks a common price zone for a pullback or consolidation of several weeks or more. The provisional harmonic barriers at $ 1,781 and $ 1,825 could slow down or eventually rise, but the rally can reach the 1.000 extension, which always coincides with the measured movement target.
Strong bullish trends often exceed the 1.000 barrier, reaching the 1.618 extension, which marks further resistance. That level has lined up within 43 psychological resistance points at $ 2,000, marking a ceiling that cannot be broken for months or years. Looking back, the stock crossed $ 1,000 for the first time in July 2017 and climbed that level three months later, but price action may not be as favorable this time, with trade wars on the horizon.