Monday, February 3, 2014

AMZN Amazon Daily Chart Rising Wedge Collapse Into 'Correction' Market

The failures from rising wedges can be quite dramatic. On Friday, AMZN collapses -11% immediately plunging into a Correction Market (down more than -10%). Note how price fell out of the wedge six days ago, then bounced off the 50-day MA and horizontal support and H&S neck line at 383, back kissed the lower rail of the wedge, and collapsed. The H&S pattern shows a head at 410, neck line at 383, which targets 356. Bingo, price fell there in one fell swoop. The chart is weak. The weekly chart shows weak and bleak indicators pointing to lower lows as the weeks play out. Price is on an island above 345 so a potential island reversal is in play where price would drift lower to 345, then collapse down through the gap to print at 330 and lower to create the island reversal.

Note the strong volume, traders did not hesitate to throw Amazon overboard. Funny how these same traders told Ma and Pa Kettle in December that it has legs and it is a great stock. Someone had to be the sucka and hold the bag. If fortunate to ride this high-flyer for many months, take the money and move on to other opportunities. Price will likely want to fill the gap at 375-383 moving forward, back kissing the H&S neck line, however, it would be surprising to see AMZN regain 4 hundo this year. A steady sideways to sideways lower move for Amazon is most likely as the year plays out. Bezos' delivery drones are sputtering in the air and like Icarus, they fall back to earth as packages splash into the neighbors swimming pool. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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