Stock of the day: Amazon

While the stock market was buzzing with Tesla’s impressive 10% rise on Monday, it’s essential not to overlook significant movements in other market giants. One such company that deserves a spotlight today is Amazon.

For the uninitiated, Amazon has been on a consistent upward trajectory for several months. However, a recent formation on its price chart suggested a brief halt. A pennant pattern, recognized for its converging trendlines, emerged and was highlighted by blue lines on the chart. In technical analysis, this pennant formation often indicates a continuation pattern, suggesting the previous trend might resume.

Monday’s trading session witnessed a positive development for Amazon as the price broke above this pennant formation. At face value, this breakout seems to present a compelling case for a ‘buy’ signal. But, as traders know, there’s always more to the story.

Looming just beyond this breakout is a crucial resistance level, marked in yellow, standing firm at $145. Entering a long position just beneath a significant resistance is traditionally seen as risky. It’s akin to attempting to push through a ceiling; the potential for a reversal is palpable.

So, what’s the strategic play here?

For bullish traders, patience could be the key. A definitive break above the $145 resistance could be the confirmation many are seeking, signaling that Amazon’s upward momentum has not only resumed but is strong enough to push past significant barriers.

However, for those leaning bearish, or for the risk-averse looking to hedge, there’s another scenario to consider. If Amazon’s price fails to surpass the $145 mark and subsequently showcases a reversal pattern, it could be an indication to initiate a short position. The potential downside target? The red uptrend line that has supported Amazon’s rise over the past few months.

Source: https://www.axiory.com/analytics/stock-of-the-day/stock-of-the-day-amazon-3