Amazon (AMZN) appeared as the #2 top stock in our compression scan recently and it didn’t disappoint us with a powerful breakout impulse to all-time highs.
However, today we’re seeing a standard “fade” or retracement trigger away from the highs.
As I noted yesterday – and wanted to highlight for you today – Amazon set up one of the most elegant intraday reversal patterns I’ve seen.
Let’s take a look at the pattern for your educational and planning resources:
I run stock scans and publish the results to members, and Amazon topped our list of “Squeezed and Compressed Stocks Ready to Breakout.”
We can see what happened next with a multi-day rally and breakout from $860 to $920 in a week.
That alone is a great educational resource in the “Range Alternation” principle of price behavior.
Nevertheless, Wednesday gave us a shooting star bearish reversal candle (daily) and today gives us a strong sell-day lower as price retraces down from the $920 achieved high.
While the pattern (reversal candle above upper Bollinger) is impressive, the lower timeframe reversal is stellar:
Wednesday simply continued the rally with a gap and Bull Flag taking price above $920.
However, a lengthy negative divergence in an overextended market gave way to a beautiful – and textbook – Rounded Reversal pattern.
The minimum target for a Rounded Reversal is the beginning of the pattern (arc) and price achieved that this morning into the $905 level.
After a double-bounce, sellers once again took over the market and pressed price beneath $905 toward $900.
With the elegant intraday Rounded Reversal complete, continue watching the daily chart and signs for any additional weakness beneath $900 should buyers fail to step in and support price at the $900 “round number” pivot.
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Corey Rosenbloom, CMT
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