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CHART ANALYSIS


Amazon.com's Weekly Chart Says It's Still A Jungle Out There

09/25/02 03:24:20 PM
by Gary Grosschadl

Amazon.com has had a good run off its lows and the ascending triangle is potentially a bullish formation BUT ...

Security:   AMZN
Position:   N/A

Amazon.com's weekly chart has bullish implications if you're looking at the ascending triangle. But there are mitigating factors making it a jungle for traders going forward. To break above the triangle requires major volume to overcome that resistance zone marked by not only the 200-day EMA overhead resistance but also a previous gap area around $22.

A more likely scenario is a trading zone for AMZN for the following reasons :

1. Weak and plunging ADX suggests little trend strength going forward

2. Short-term stochastics show a potential downleg starting

3. Previous gap support likely strong between $12-13

4. Chance of MACD stall at zero line

5. Powerful overhead resistance zone with gap resistance

Graphic provided by: stockcharts.com.
 
If this trading zone is correct, traders will be able to profit by waiting for stochastic reversals near those channel lines (i.e. $12-13 to $19-20). A break above or below this channel could be noteworthy, suggesting bigger changes, either a bullish upthrust or a bearish downleg. In the meantime alert traders can use short term stochastic turns as a short term guideline while monitoring their other favorite indicators.



Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.

Website: www.whatsonsale.ca/financial.html
E-mail address: gwg7@sympatico.ca

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