Amazon
(AMZN) shares are under the scrutiny of market participants as the
stock steered down Friday after quarterly earnings from the e-commerce and
cloud provider failed to rev the investor engine.
Huge growth in revenues from the Amazon Web Services (AWS)
business would have been more appealing to investors if its cloud competitors
like Microsoft
(MSFT) and parent-company Google
Alphabet (GOOGL) had not recently reported stellar good results from
their cloud units. AWS revenue growth lagged at 17.5% in the latest quarter
compared with its competitors, where Azure and Google Cloud Platform scored 39%
and 32% growth in sales, respectively. Jefferies analysts felt that AWS was
"disappointing given big momentum at Azure and GPC" in view of the
results.
Shares fell by 8% to just below $215 just before the Friday
close, pushing Amazon shares into negative territory for the year. Following
the earnings report, a few analysts raised their price targets for Amazon,
those at JPMorgan saying they "would buy the pullback."
Here we take a look at its chart and apply some technical
analysis to lay out key post-earnings price levels that investors are likely to
focus on.
Rising Wedge Breakdown
Following a slump in early April, the Amazon stock was in an
upward trend from a rising wedge pattern, coinciding with the bullish golden
cross exit when the 50-day moving average (MA) rose above the 200-day MA.
Price action ended abruptly on Friday, and momentum further
decelerated after the shares closed below the lower trendline of the rising
wedge pattern, setting the market for the next bearish sequence.
Let us define key support levels on Amazon's chart to watch;
we will also bring up a significant overhead resistance area worthy of
attention as stocks may attempt a recovery.
What Are the Support Levels to Watch?
The first support level to look at sits around the $199
zone. The stocks may be supported in this area near last July's peak, also
quite closely conforming with the bottoms formed on the chart in November and
May.
A strong close below this level would see the stocks coming
back to test another support at $190, and investors might consider accumulation
in this area around a horizontal multi-month line extending back to April last
year.
Should a deeper retracement occur, this avenue opens the
possibility of shares returning to lower support at the $175 level, where
buying interest may magnet towards the trading activity on the chart stretching
between February last year and April this year.
Major Overhead Area Worth Monitoring
In a possible recovery attempt at Amazon stock, it becomes
majestic to see how price behaves around the $233 level. This area on the chart
could be a place for selling pressure near the top of the rising wedge pattern
and the swing high from December.
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