Market Analysis

Amazon is stuck, moving sideways. Which way will it break out?

Almost everyone knows Amazon, the department store that supplies households all over the world, and has changed the shopping behavior of many people. However, fewer have heard of Amazon Web Services (AWS), a subsidiary of the online retailer, and one of the world’s leading providers of cloud computing. With Amazon Prime memberships, advertising revenues, the Marketplace and, most recently, its delivery service, the company is broadly positioned and may have set the course for further growth.

The chart picture for Amazon shows the bull market run that ended abruptly on September 4, 2018. From then on until Christmas Eve, the bears took over but the market and the stock recovered slightly. Since the second week of January, the price has been moving sideways, ranging between its 38-day average of about US$1645 and its 200-day average of around US$1723.

If the market moves down, the lower bound of the sideways movement in the US$1595 area could provide support for the bulls. Moving further down, the space between US$1445 and US$1480 will be critical to further development. Sliding under this area could result in still lower prices. A significant structural level is something under Christmas Eve’s low at the range of US$1260.

However, if the bulls manage to defend the range at US$1595 and the stock can successfully break out of the sideways pattern, the first resistance could be in the US$1770 area. If the market pierces upwards here, the next resistance could be in the US$1880 area. If the bulls remain in control, then the old September 2018 highs in the area of US$2025 could represent the next resistance level.

Consistent with the sideways ‚holding pattern‘ the MACD indicator currently gives no clear signal. Both the MACD and the trigger line are almost parallel. The histogram is at its zero line with little momentum.

AMZN.US Daily Chart | Source: ActivTrader

AMZN.US Daily Chart | Source: ActivTrader 


Written by Daniel Schuetz, External Analyst


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