What’s happening with Amazon?
Today’s stock of the day features Amazon as its price has been fluctuating between $2,900 to $3,500 for the last 5 months since September 2, 2020. The significance of what is actually happening is that it is creating a pennant pattern.
AMZN Current Stock Pattern
Take a look at the chart below. There is a clear pennant formation happening. This usually happens after a stock has had a great run up in price, which we see in Amazon from the earlier half of 2020. Next, the stock price moves sideways seeing lower highs, and higher lows. This forms a closing triangle that can cause eruption or destruction.
If the stock breaks through either the top (resistance) or bottom (support) lines, it is likely to keep moving in whichever direction it takes.
Should I Buy Amazon Stock?
At Stock Tavern, we would monitor the price of this stock of the day in the coming days and weeks. . Amazon is a great company and their latest earnings blew expectations out of the water. There seems to be some hesitation by the market with the recent news of Jeff Bezos stepping down as CEO, and rightfully so. Jeff has made great progress with Amazon over the years, and his shoes will be hard to fill for the new upcoming CEO Andy Jassy.
If the stock breaks out of the top of the pennant’s resistance line on high volume, it is usually a buy sign and a signal of bullishness to come. If the stock breaks down through the bottom support line, it may be time for an Amazon price correction downwards. Check out our learning center for more information on chart patterns and investing strategies.
As always, Stock Tavern is not suggesting you buy or sell this stock, and this analysis should not be taken as financial advice. Always do your research and make your own decisions, we all have different risk profiles and therefore no trade is right for everyone.
Disclosure: Stock Tavern has no current position in AMZN