Amazon (AMZN) rose sharply on Friday as shareholders and analysts applauded its second-quarter results. Analysts said AWS’s acceleration and strong overall revenue growth were the key points that fueled the price rally on Friday morning. Sounds good to me, but let’s stick to charts and indicators.
In our July 18 review of AMZN, we wrote that “Traders could be long AMZN around $116. Risk below $108. On the upside, we could rally to $143 or higher.”
Let’s see where we are now.
In AMZN’s daily bar chart below, we can see that stocks have risen. AMZN is approaching the January, February, March and late April lows. This price area may provide some chart resistance as it acted as former support. Prices bottomed out in May and June and the uptrend was underway before today’s price spike.
The slope of the 50-day moving average line is positive and the On-Balance-Volume (OBV) line is pointing up and the Moving Average Convergence Divergence (MACD) oscillator is now in a bullish alignment above the base line.
In AMZN’s weekly Japanese candlestick chart below, we can see an improving technical picture. Stocks have rallied in recent weeks, but this week’s candle won’t be plotted until Friday’s close. The candle should have a white real body (bullish).
The weekly OBV line should move higher and the MACD oscillator has already moved higher for a signal to buy cover shorts.
In this daily dot-and-digit chart from AMZN, below, we can see a potential price target at the $157 area.
In this second dot and number chart from AMZN, below, we have used weekly price data. Here the chart suggests a price target in the $193 area. We will see.
Basic strategy: The AMZN rally should be watched closely to see how traders and investors react in the $140 area. Some traders may want to become sellers, but we need to see if that holds back the advance. Stay nimble.
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