Why Amazon Stock Looks Set To Skyrocket Back To All-Time Highs

Amazon.com, Inc AMZN was trading mostly flat on Friday, as the stock continued to trade sideways after shooting up over 17% between March 15 and March 22.

The rise paired with the sideways consolidation has settled Amazon into a bullish flag pattern on the daily chart. The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines.

For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
Bullish traders will want to watch for a break up from the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.

A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern or if the flag falls more than 50% down the length of the pole.

The Amazon Chart: The sideways consolidation within Amazon’s flag formation has helped the stock to cool down its relative strength index (RSI) slightly, which reached the 64% level on March 22. When a stock’s RSI nears or reaches the 70% level it becomes overbought, which can be a sell signal for technical traders.

In addition to trading in a bull flag pattern, Amazon is trading in a strong uptrend, with the most recent higher low formed on Thursday at the $3,201 level and the most recent higher high printed the day prior at $3,327.40. If Amazon breaks up from the bull flag pattern, the stock will also print a higher high.
The measured move, if Amazon breaks up from the flag formation on higher-than-average volume, could take the stock up toward the July 13, 2021 all-time high of $3,773.08.
When Amazon reached the high-of-day on March 22, the stock attempted to regain support at the 200-day simple moving average (SMA) but rejected and wicked from the level. If the stock is able to regain the area as support and trade above it for a period of time, the 50-day SMA will cross above the 200-day, which would cause a bullish golden cross to occur.
Amazon has resistance above at $3,326 and $3,400 and support below at $3,230.98 and $3,131.06.

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