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Fan Yang

Amazon (AMZN) - I am Inclined to Expect Bearish Correction

Amazon.com Inc. $AMZN has been trading sideways since August, but I think there will be more downside in October.

AMZN Daily Chart

(click to enlarge)

Bearish Break:
- First let's note that for the most part, AMZN has been making higher highs and higher lows since late 2018 when price briefly broke below $1400 then rebounded sharply.
- After share price poked above $2000 again, price started to retreat sharply in late July into early August. This dip broke below a rising trendline, but price was still above the 200-day simple moving average (SMA).
- Then, price was trading roughly between $1750 and $1850.
- We saw a bullish attempt in early September rejected at $1850, leading to a bearish swing that cracked the $1750 support this week.
- I think there is a good chance AMZN will slide to $1700.
- For me, I already have exposure around $1700 and wouldn't mind adding if price falls towards $1600 before adding more. Support in this $1600-$1700 would be indicative of a bullish trend. That means, if price subsequently challenges the $2050 again, I would expect a bullish continuation breakout.
- However, I would also make sure to have dry powder for the $1350-$1400 area, which is a longer-term consolidation range support, seen on the weekly chart.

AMZN Weekly Chart

(click to enlarge)

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