Don't Ignore This Chart!

Amazon To Cut Prices At Whole Foods, Prints Hammer On Support

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It was another round of selling for Whole Food Markets' (WFM) competitors as Amazon.com (AMZN) made headlines by announcing that prices would be cut at WFM stores.  That spooked the likes of Costco (COST), Wal-Mart (WMT) and Target (TGT) as all three saw drops on very heavy volume.  Meanwhile, AMZN's own price slump may have ended on Thursday as a bullish hammer printed at price support.  Check it out:


If the price support reflected above fails to hold, be very careful.  The weekly chart on AMZN shows slowing momentum in the form of a negative divergence and AMZN is currently resting just beneath its 20 week EMA support.  So loss of price support above would also represent the loss of rising 20 week EMA support - a double technical negative.  Here's the weekly chart:

 A close below 950 could accelerate the selling and it's certainly conceivable that AMZN could trade over the next few weeks as low as 850 - to test the 50 week SMA and reset the weekly MACD at or near centerline support (pink arrows).  So while the news out of AMZN may be shocking some of its competitors, AMZN has its own technical issues to be concerned about.

Happy trading!

Tom


 

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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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