Technical Analysis – Amazon stock drops after reaching 6-month high

Melina Deltas, XM Investment Research Desk

Amazon has been creating higher highs and higher lows after the rebound on the 1305 support level, jumping to a fresh six-month high of 1928 on April 23. Chances for a downside reversal, however, are increasing as the RSI indicator dropped below the overbought territory and the stochastic oscillator posted a bearish crossover within the %K and %D lines.

Another step lower may reach a key support at the 20-simple moving average (SMA) currently at 1867, marginally above the 1852 support. Should this prove a weak obstacle, the selling could pick up speed until the 40-SMA around 1838 and the 1816 barrier, which stands near the ascending trend line. A drop below these levels could switch the bullish outlook to neutral.

On the flipside, if prices climb above the six-month high, it could open the way towards the 2033 resistance, identified by the peak on October 2018.

In the medium-term view, the stock price is still increasingly bullish as long as it has been holding above the uptrend line since December 2018. Only a close below the diagonal line may change this outlook.