Technical Analysis – Amazon stock loses momentum after struggling to break above upper channel boundary

Melina Deltas, XM Investment Research Desk

Amazon stock prices have been consolidating since February 12 and have been stuck in a sideways channel with upper boundary the 1621 resistance level and lower boundary the 1353 support hurdle. The neutral picture in the medium-term looks to last a while longer after prices failed to break the upper channel on Thursday.

Resistance was met near the aforementioned resistance barrier, forcing the price to reverse lower. The negative bias in the near term is supported by the deterioration in the momentum indicators. The %K line of the stochastic oscillator has fallen sharply and posted a bearish cross with the %D line. Moreover, the RSI indicator is moving slightly lower in the positive area, suggesting any upside movement will be weak.

If prices continue to head lower, support should come from the 1544 level. A drop below this area would reinforce the short-term bearish view and open the way towards 1414, but first, the price needs to go through the 50- and then the 200-simple moving averages (SMAs) at 1519 and 1446 respectively.

However, should an upside reversal take form, immediate resistance will likely come from the upper boundary of the consolidation area. A successful close above this significant obstacle could drive the price towards the 1700 psychological level.

Overall, the short-term picture indicates a bearish correction as the price completed two consecutive bearish days with weak volatility.