Amazon has known a great rally since the end of the financial crisis in 2009. Since then, AMZN has been trading in a channel, bouncing between the support and resistance. A couple of days ago, AMZN broke the resistance to the upside and rallied higher.
The weekly RSI (85) and the daily RSI (89 on 31/01/2018) are both in the overbought region. For the stock to go higher, the RSI levels should cool down. On the image below, a blue circle is drawn around a candlestick with a long wick on top of it. This candlestick indicates a lot of selling. The amount of selling is confirmed by the volume bar spiking out. The 50 MA (weekly) has some catching up to do before it could serve as a support like several other times in the past. On the daily chart, the MACD is about to cross over. All these mentioned indicators are bearish which means AMZN could fall.
If AMZN would fall, then there are some support levels to watch. On the image below, a purple line is drawn. This trendline is the resistance of the channel which AMZN has broken through. This resistance now acts as a support. The intersection of the blue support line and the yellow support line (of the channel) could potentially be a good buying opportunity. If the 200 MA (daily) would catch up, it could meet the support lines at the intersection. If these supports would fail, then the red rectangle represent the selling areas. The green rectangles represent the buying areas.
Disclaimer: This is not financial advise.
I just want to give my humble opinion on some products by doing technical analysis. There may be some minor and/or major flaws. Nobody is perfect and I'm willing to learn from my mistakes through your opinions. Thank you.
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Image source: https://www.tradingview.com/
