Don't Ignore This Chart!

Amazon Forms Big Spinning Top at Key Retracement

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Amazon (AMZN) remains in a short-term uptrend, but the stock is nearing a potential reversal zone. First, notice that the stock broke down with high volume in late January. After some bouncing in February, AMZN mounted an advance the last four weeks and retraced around 62% of the prior decline. Second, notice that broken support is turning into resistance as a large spinning top formed last week. The 380 area is a prime suspect for a reversal zone. A move below the channel trend line would provide the first sign of weakness and a break below last week's low would fully reverse the short-term uptrend. A reversal would then call for a continuation of the January decline.

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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