Amazon.com, Inc. (NASDAQ:AMZN) now trading near a trio of trendlines that have marked attractive entry points for a long trade in the past

Amazon.com, Inc. (NASDAQ:AMZN) now trading near a trio of trendlines that have marked attractive entry points for a long trade in the past

Amazon.com, Inc. (NASDAQ:AMZN) now trading near a trio of trendlines that have marked attractive entry points for a long trade in the past

It’s been a rough August for the U.S. stock market, with the tech sector taking a notable hit on escalating U.S.-China trade rhetoric. This weakness may have created buying opportunities among individual names, though, with FAANG stock Amazon.com, Inc. (NASDAQ:AMZN) now trading near a trio of trendlines that have marked attractive entry points for a long trade in the past.

Taking a closer look, AMZN shares topped out at $2,035.80 on July 11, a chip-shot away from their Sept. 4 record high of $2,050.50. The security went on the retreat all the way back to the $1,750 region by early August — home to its 160-day, 200-day, and 320-day moving averages, which have all had historically bullish implications for Amazon stock, according to data from Schaeffer’s Senior Quantitative Analyst Rocky White.

Drilling down on the specific data, there have been six other times in the past three years AMZN has come within one standard deviation of its 160-day trendline after trading above it 60% of the time in the past two months and in eight of the last 10 sessions. Following these previous signals, Amazon shares were up 7.8%, on average, one month out, with 83% of the returns positive.

For the 200-day trendline, there have been four similar signals in the last three years, resulting in an average one-month gain of 4.9%. And in the five times Amazon came within one standard deviation of its 320-day after a lengthy stretch above it over this same time frame, the FAANG stock was 10.4% higher, on average, 21 days later, boasting a 100% win rate. Based on its current perch at $1,823.73, up 2.2% today, another 10% move higher would put AMZN back above $2,000.

A steady stream of short selling likely exacerbated AMZN’s retreat from its mid-July peak, with these pessimistic positions up almost 25% in the July 1 through Aug. 1 reporting periods. However, another rally off trendline support could shake some of the weaker bearish hands loose, which could create tailwinds for Amazon.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 1,898.06.

The projected lower bound is: 1,755.89.

The projected closing price is: 1,826.97.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with AMAZON COM). It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 64.7208. This is not an overbought or oversold reading. The last signal was a buy 4 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 41.61. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -42. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 17 period(s) ago.

Rex Takasugi – TD Profile

AMAZON COM closed up 39.420 at 1,824.340. Volume was 4% above average (neutral) and Bollinger Bands were 72% wider than normal.

Open     High      Low     Close     Volume___
1,783.0001,831.7431,780.0001,824.340 4,075,021
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,814.14 1,897.67 1,751.37
Volatility: 33 24 44
Volume: 4,335,715 3,554,503 5,185,924

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

AMAZON COM is currently 4.2% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of AMZN.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AMZN.O and have had this outlook for the last 10 periods.

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