AMZN Update – October 19, 2017 …

I wrote an update on AMZN yesterday that raised the possibility of the stock making a possible Wave 2 high of a new possible trend or at best a Wave 2 high of a large sideways consolidation pattern (click here).  The stock is about $13 below where it was when I wrote that blog post and it looks like it is possibly testing a break of the weekly broadening price pattern that I have been tracking for AMZN.

You might say … whoop-t-do, price is breaking some imaginary price pattern!!  I say beware when price breaks price patterns, because it could be the early warning of a change in trend.  Here are the charts …

AMZN – 195 Minute Chart

Today’s low for AMZN is $980.24, so we are definitely testing the 195-min ATR support level and the lower parallel line of the broadening price pattern.

AMZN – Daily Chart

Daily ATR support is at $966.02 … I doubt that level can be taken out before the earnings report scheduled for next week on October 26th after the close.  If the report or the guidance is disappointing then taking out that level will not be a problem, and I would suggest that a new trend direction, or a new corrective pattern has indeed begun.  Where could traders look to for support if that were to happen?

AMZN – Weekly Chart #1

If you are a perma-bull, you probably would look to the last leg up as the area that could be retraced into the SLOT support zone.  The 61.8% support zone of that leg is at $854.12. or about 14% less than where the stock was yesterday when I originally wrote about the possible Wave 2 high.

AMZN – Weekly Chart #2

What if price looks for support on the bigger wave structure off of the early 2016 low … the 61.8% support level off of that low would be $707.19.

AMZN – Weekly Chart #3

Heaven forbid … what if AMZN retraced into the SLOT zone of support drawn for the whole weekly broadening price pattern off of the 2015 lows?  I would look at the 50% support level of $685.58 in that case.

Many of you readers would scoff at these levels and state that they were insane.  Maybe … lets take a look at AAPL back in late 2012 and early 2013, when all it did was make an important pivot high that led to a corrective pull-back before it went on to make new higher highs.

AAPL – Weekly Chart #1

AAPL actually pulled back to the 78.6% level of the latest bull run move during that corrective move.  Note that if you respected the break of the broadening price pattern in AAPL back in late 2012, you could have avoided a lot of medium-term pain.

AAPL – Weekly Chart #2

If you looked at the bigger weekly chart move off of the 2009 lows, price actually made it down to precisely the 50% SLOT support level.

So before you say that there is NO WAY THAT AMZN can’t pull-back into the bigger SLOT support, think back to what happened to AAPL which was bar down, the most favored stock in the market at the time in 2012 when that weekly pivot high was put in.

Cheers … Leaf_West

Leave a Reply