Amazon.com, Inc. AMZN plunged around 6% on Tuesday to hit a new 52-week low at $96.51.
A decline in general markets, amid a stubbornly tight labor market ahead of Wednesday’s Federal Reserve interest rate decision, did not help matters.
Amazon is also still suffering from a bearish reaction to its worse-than-expected Oct. 27 third-quarter results, which sent the stock down nearly 7% the next day.
Soaring inflation and rising interest rates could further curb spending ahead of the holiday season, which could negatively impact Amazon’s results in the fourth quarter.
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The Amazon chart: Although Amazon has fallen 20% since hitting a high of $121.32 on Oct. 25, a downtrend wasn’t confirmed until Monday, when the stock hit a lower high. $104.87. On Tuesday, Amazon confirmed that the new downtrend is intact by printing a lower low.
- Amazon is likely to rebound to at least form another lower high over the next few days, as Tuesday’s sharp decline sent the stock’s relative strength index down to the 28% level. When a stock’s RSI drops below 30%, it becomes oversold, which can be a buy signal for technical traders hoping to rebound.
- If Amazon closes the trading session near its low for the day, the stock will print a bearish Marubozu candlestick, which could indicate that the price decline will return on Wednesday. If the buyers come in and cause the stock to close the session with a wick lower, it could indicate that a rebound is on the horizon.
- Amazon has upper resistance at $99.88 and $109.30 and lower support at $95.49 and $92.18.
See also: What happens with Amazon shares