Amazon vulnerable for further downside pressure as US-China trade talk looms

Amazon's technical chart is not showing any signs of recovery despite a 17% decline since 11 Jul 2019. (AMZN)

click to enlarge charts

Key Levels (1 to 3 weeks)

Pivot (key resistance): 1765.10

Supports: 1692.70, 1585.60 & 1467.80

Next resistances: 1855.30 & 2035.80/2050.50

Directional Bias (1 to 3 weeks), a multinational technology giant that has business operations in e-commerce, cloud computing, digital streaming and artificial intelligence. Given its leadership in the U.S e-commerce industry, its share price movement can be used a gauge to dissect the health of the U.S. consumers as discretionary spending via e-commerce has taken over a significant portion of market share from traditional “brick & mortar” retailers.

Also, Amazon is a key component stock in the U.S. benchmark stock indices as it has the 3rd largest weightage in both the S&P 500 and Nasdaq 100.

Bearish bias below 1765.10 and a break below 1692.70 reinforces a further potential downleg to target the next medium-term supports at 1585.60 and 1467.80 next. On the other hand, a clearance with a daily close above 1765.10 negates the bearish tone for a push up towards to retest the 12 Sep 2019 swing high of 1855.30.  

Key elements

  • After a retest on its current all-time high level of 2050.50 on 11 Jul 2019, AMZN has declined by -17% and right now its price action is just 0.75% away from its 03 Jun 2019 swing low area of 1692.70; an important medium-term swing low as it has shaped a V-shaped reversal from it to retest its all-time high level printed in 04 Sep 2019.
  • The recent rebound from 03 Oct 2019 low of 1685.06 is likely to be considered as corrective/dead cad bounce as its latest price action has gapped down and formed a daily bearish candlestick yesterday after a daily “Doji” candlestick formed on Mon, 07 Oct. These observations suggest sentiment has turned negative after a lack of bullish conviction to push prices higher.
  • In addition, the daily RSI oscillator remains below a significant corresponding descending resistance at the 45 level and has not reached an extreme oversold level. These observations suggest that medium-term downside momentum of price action remains intact.
  • The key medium-term resistance of 1765.10 is defined by the upper boundary of a descending channel in place since 11 Jul 2019 high and the former range support from 05 Aug/28 Aug 2019 low.
  • Relative strength analysis against the market (S&P 500) and its sector (Consumer Discretionary) as seen from the respective ratio charts are suggesting further potential underperformance of AMZN.

Charts are from eSignal 

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account