The recent trend in Amazon (AMZN) has been upward, and this is certainly obvious on the 30-minute chart, below, which shows two zones of technical support: $333.42 to $335.16 and, below that, $325.11 to $326.90.
Amazon (AMZN) -- 30-Minute
Source: Dynamic Trader
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But, while it is possible that the rally will continue in this stock, I want to highlight a resistance area -- based on both timing and price -- seen on Amazon's daily chart. If you are long this stock right now, you need to be aware of this.
On the chart below, I am quite focused on what I call "time symmetry." As longtime readers know, I find that many price swings in stocks or indices are similar in either price or in their timing, or both -- and we can use these symmetrical moves to help determine whether the odds are up for a reversal in any given trend.
Amazon (AMZN) -- Daily
Source: Dynamic Trader
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I have illustrated the time-based symmetry on the chart above, and you can see how it has actually worked in the past. This stock has undergone multiple price swings that have lasted 22 to 26 trading days. In the past, after a rally of about this length, Amazon has undergone some very clear trend reversals. For example, after the 23-session rally into the Sept. 4 high, the stock rolled over and declined just over $65. Note that the most recent rally has lasted 24 trading days into Friday's high -- a very similar move to those prior swings of 22 to 26 sessions.
This means that, although Amazon's recent trend has been bullish, we want to be alert to a possible termination of the current rally.
Now, besides the time resistance, we also have price resistance that comes in from $340.34 to $342.06 and from $345.25 to $350.18, with a focus on the $345.25-to-347.55 area. So what can you do with this information?
Well, if you want to trade with the short-term bullish trend, be warned that you should ditch the position if the above 30-minute-chart price support does not hold. On the flip side, if you want to consider a counter-trend bearish trade based on the above resistance levels, please don't short this stock if you don't see trend-reversal indications.
As I've said in the past, I don't truly know where the market will go, but I do know of key trading decisions, and I can place some educated bets against them. Also note that, when a trade starts to play out, it's a good idea to use a trailing stop. This helps protect you as you get as much out of the trade as possible. If and when a key zone is violated, just exit the play and look toward the next setup.
One final thought: Your time frame has everything to do with whether you go long or short any given security. My goal, as always, is to identify some educated bets for you that will hopefully assist you in extracting some cash out of the market.
Please refer here for more information on trade triggers.
See here for general guidance on Fibonacci trade setups.
At the time of publication, Boroden had no positions in the stocks mentioned.