What to Watch For On Amazon.com As The Stock Trades Toward A Gap-Fill

On Saturday evening, Benzinga asked its followers on Twitter what stock they’re most zeroed in on to start the week. From the replies, Benzinga selected one ticker for technical analysis.

@Narayanan_Am, @TraderHockeyMom and @Carlos_H_TX responded to say they’re focused on Amazon.com, Inc AMZN.

Amazon plunged almost 5% on Friday after U.S. Federal Reserve chair Jerome Powell took the stage at the Jackson Hole Symposium with a hawkish tone, throwing the markets into a state of chaos. The S&P 500 plummeted 3.36%, pressured by Amazon, Apple, Inc AAPL and Microsoft Corporation MSFT, which are the top three holdings in the index.

Amazon closed Friday’s trading session by printing a bearish Marubozu candlestick, suggesting the stock was likely to gap down on Monday, which is what happened.

Both bullish and bearish trader will now be watching for Amazon to completely fill a lower gap as the stock continues trading in its newly confirmed downtrend.

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The Amazon Chart: Amazon gapped down about 0.6% to start the trading day on Monday, bounced up to fill that gap before running into a group of sellers who knocked the stock back down slightly. Amazon is trading in a lower gap between $122.84 and $132.41 that is about 90% likely to completely fill.

• On Friday, Amazon confirmed a downtrend had started by forming a lower low, under the Aug. 24 low of $132.10. The most recent lower high was printed Aug. 26 at $137.83. When Amazon bounces up, bearish traders may choose to look for the stock to print a bearish reversal candlestick, such as a doji or shooting star candlestick, under $137 to enter into a short position.
• Bullish traders exercising patience will be watching for Amazon to continue in its downtrend to completely fill the lower gap. Once the gap is filled, the stock may indicate a reversal to the upside is in the cards by printing a bullish reversal candlestick, such as a doji or hammer candlestick.
• Amazon has resistance above at $136.83 and $142.18 and support below at $131 and $125.93.
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Photo: Courtesy of Phil Murphy on flickr