Technical Analysis – Amazon falls from 9-month high; forms hammer as it stalls at 23.6% Fibo


Anthony Charalambous, XM Investment Research Desk

Amazon pulled away from a nine-month high of 2032 in the previous weeks, to halt yesterday at the 23.6% Fibonacci retracement level of the up move, from 1670 to 2032, of 1949. The 21-day simple moving average (SMA) is also very close and a hammer formation has taken shape, pushing the price above the resistance of 1964.

The momentum indicators are suggesting that the sentiment may turn negative as the MACD has dived below its trigger line and RSI nears the neutral 50 area after falling out of the overbought region. The ADX shows that a trend exists, as it approaches the 25 level.

Should we see the pair keep up the negative behaviour in the short-term, initial revisit of the 23.6% Fibo of 1949 would need to break, before the 38.2% Fibo of 1896 and marginally lower 40-SMA could come into play. Next in focus would be the support of 1870 and then the 50.0% Fibo of 1852. Fracturing these could bring about the 61.8% Fibo of 1810 – close to the 1800 handle.

Otherwise if the price manages to rebound and extend towards the 2032 resistance, advances above this high could see the all-time high of 2050 play out.

Summarizing, Amazon stock has been bullish since the beginning of the year, but for bearish dynamics to take control, a break of the 1870 support, would need to create a lower low in the short-term.