Stock of the day: Amazon

A lot is going on with Stocks right now, sharp drops and rapid reversals. That is the aftermath of the Federal Reserve (Fed) meeting and it actually took traders some time to come up with a consensus and agree on the direction for the next few days and weeks. It’s hard to say if we actually have this consensus, but for now, the situation looks bullish. In today’s piece we focus on Amazon. We had previously talked about Amazon in January when we were bearish on the stock, here’s what we said:

“The target for the drop is on the horizontal support around 2900 USD (green), which has already proven to be effective during the second half of 2020. Chances that we’ll reach that level are quite high unless the price jumps back above the red line, which would create a false bearish breakout and as a consequence, a strong buy signal.”

Well, that was a great call. The price dropped like a rock and reached our target a few days later. It even went below it for a little while. You can see, that yesterday, the price managed to climb back above the 2900 USD level. That leaves the false breakout pattern (violet) on the chart, which is usually a great signal to trade in the opposite direction.

In our case, the opposite direction is an upswing and our view on Amazon is back to being positive. It will stay that way as long as the price stays above the 2900 USD support. There’s a high chance that this will happen.