AMZN - retesting breakout consolidation area, good setup
Summary
Provided market stays bullish I believe AMZN poses a good risk reward setup based on an extended consolidation period and high volume breakout with retest.
Analysis
Let's focus on this light gray box I've drawn that ranges from 1818.89 to 1830.77 and spans the width of the chart. Support and resistance are often fuzzier than one specific line, in this situation, we have about a $12 range where price responds. Observe for yourself how price reacts to this area.
Last August we fell below this level and attempted to break back above without success. Note the lower volume breakout attempt on Sept. 5th where price traded sideways and failed to hold above this level.
I also want to point out my OBVX v2 Oscillator, note how upward momentum has been capped since last August. Decent selling pressure and very little continuation on upward moves.
So, price consolidates for about 5 months, putting in slightly higher lows in an ascending triangle pattern.
Finally, on Dec. 26th we get a high volume break (1) and a large up candle. The following session we gap up and explode on high volume, then sell off closing near the previous sessions close. Interestingly, this candles highest price rejected almost exactly at the 61.8% retracement of the July 11th swing high, to the October 3rd swing low (blue fibs). When I see something like this I look to the volume profile, I want more clues. On the right of the chart you'll see a larger volume node. This has and will continue to serve as moderate resistance, so keep this area in mind while trading. Check out the OBVX, finally breaking out of that capped range.
The most recent session ended in an interesting place. We have a spinning top doji, which indicates indecision, bears are waiting for more information & so are the bulls.
Once again, we have some interesting fib respect. This time using a fib extension we see we've retraced almost exactly to the 78.6% retracement. This level also has confluence with our light gray box area we started this discussion with.
We also have a very near test to the well respected 200 sma. Look back on this chart to how well AMZN respects the 200 sma, and here we are sitting just above that level, on top of our gray box, above our point of control area.
I like the risk reward from this level, though I don't advise haste while entering. The spinning top doji warrants some caution here. But I do believe we have upside potential.
Provided market stays bullish I believe AMZN poses a good risk reward setup based on an extended consolidation period and high volume breakout with retest.
Analysis
Let's focus on this light gray box I've drawn that ranges from 1818.89 to 1830.77 and spans the width of the chart. Support and resistance are often fuzzier than one specific line, in this situation, we have about a $12 range where price responds. Observe for yourself how price reacts to this area.
Last August we fell below this level and attempted to break back above without success. Note the lower volume breakout attempt on Sept. 5th where price traded sideways and failed to hold above this level.
I also want to point out my OBVX v2 Oscillator, note how upward momentum has been capped since last August. Decent selling pressure and very little continuation on upward moves.
So, price consolidates for about 5 months, putting in slightly higher lows in an ascending triangle pattern.
Finally, on Dec. 26th we get a high volume break (1) and a large up candle. The following session we gap up and explode on high volume, then sell off closing near the previous sessions close. Interestingly, this candles highest price rejected almost exactly at the 61.8% retracement of the July 11th swing high, to the October 3rd swing low (blue fibs). When I see something like this I look to the volume profile, I want more clues. On the right of the chart you'll see a larger volume node. This has and will continue to serve as moderate resistance, so keep this area in mind while trading. Check out the OBVX, finally breaking out of that capped range.
The most recent session ended in an interesting place. We have a spinning top doji, which indicates indecision, bears are waiting for more information & so are the bulls.
Once again, we have some interesting fib respect. This time using a fib extension we see we've retraced almost exactly to the 78.6% retracement. This level also has confluence with our light gray box area we started this discussion with.
We also have a very near test to the well respected 200 sma. Look back on this chart to how well AMZN respects the 200 sma, and here we are sitting just above that level, on top of our gray box, above our point of control area.
I like the risk reward from this level, though I don't advise haste while entering. The spinning top doji warrants some caution here. But I do believe we have upside potential.
Comment:
AMZN has broken above that key $1901.88 level we discussed (81.8% retrace). If AMZN can turn this level into support I very much like a swing entry off this level.
