Market Analysis

Is the competition heating up Amazon?

Thanks to its outstanding performance, Amazon has so far been able to rely on many loyal shareholders. Over the past ten years, the company has performed superbly. However, what would happen if support began to crumble?

The company has invested continuously in its fulfillment network with the intention of increasing profitability. However, these investments do not seem to be paying off at the moment. Sales growth declined in the last quarter of 2018, and a further decline in sales growth could also be recorded for the first quarter of 2019.

Now Apple, another big player, is entering the entertainment and subscription services playing field. Amazon may be forced to invest further so as not to miss the boat, as the market for consumer subscription services becomes even more competitive and uncertain.

The first shareholders, who thought Amazon an unstoppable growth engine will likely think again and some may even exit the share.

Looking at the chart technical situation, Amazon broke free of its sideways move last week, rose above its 200-day smoothing and even overcame resistance at US$1770 for a couple of days. With the candle from last Friday, however, the share again slipped below the structural level of US$1770.

Currently, the market is above its 200-day smoothing line, and the MACD is above its trigger line. The histogram is in positive territory, but there are signs of declining momentum.

The structural level around US$1770 could be decisive for further development. If the bulls can break last week’s highs, there could be resistance in the US$1880 area. If there is a breakthrough here, the September and October highs of last year at US$2025 could offer the next significant structural level.

If the market moves down, the upper limit of sideways movement in the $1700 range could support the bulls. If the market fails here, it will re-enter the field of sideways action, the lower edge of which at US$1595 could provide further support. In the event of a further decline, the gap between $1450 and $1480 will be crucial for new development. Sliding below this range could lead to even lower prices. A significant structural level is slightly below Christmas Eve’s low of $1260.


AMZN.US Daily Chart | Source: ActivTrader

AMZN.US Daily Chart | Source: ActivTrader 


Written by Daniel Schuetz, External Analyst


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