Amazon AMZN and the Ongoing Parabolic Arc

Nov 15, 2013: 2:20 PM CST

We continue to watch Amazon.com (AMZN) trade within what seems to be the latter stages of a parabolic arc or explosive vertical impulse pattern.

I’m a big fan of these “parabolic arc trendline” patterns – let’s update the current chart of Amazon’s (AMZN) textbook parabolic arc trend structure.

Amazon Amazon.com AMZN Parabolic Arc Arc Trendline Pattern

Amazon.com shares have traded steadily between rising ‘arc’ trendline boundaries.  It’s important to note that trendlines can and often do take the form of “arcs”  – there’s nothing at all that says trendlines must be straight lines.

Price movement – and crowd psychology – shows up on the chart as these type of patterns which reflect increasing attention, enthusiasm, and excitement over time.

It tends to build to a climax ahead of a painful reversal or ‘collapse’ after the movement literally turns vertical in shares.

We see a similar situation though not as cleanly structured with FedEx as I updated recently.

Note the compression (reduction) of volatility – meaning price range between the upper and lower trendlines – in the context of this recent parabolic move from July to present.

The trendlines have compressed together as the price activity becomes more urgent (either to buy shares or cover short-sold positions).

In general, the bulk of a price movement in a trend can emerge at the latter phases or during this ‘parabolic’ price pattern.

We can step back to the weekly chart to see how the move began and how the structure accelerated.

Amazon AMZN Amazon.com Amazon stock price weekly chart bull market trend extended parabolic arc angular momentum

From the 2007 structural breakout above $50.00 per share, price began a long-term powerful impulsive uptrend that continues with the daily ‘arc’ pattern in motion currently.

Were it not for the 2008 recession, one would assume shares would have began the ascent quicker, though we will note that Amazon shares ‘bottomed’ at $35.00 per share on November 20, 2008 which was four moths ahead of the broader stock market bottom in early March 2009.

With that in mind, shares have continued their primary ‘bull market’ uptrend.

Note the steepening increase in the lower trendline – this is a concept I like to call “Angular Momentum” where we have to update trendlines (by increasing the angle) to connect the series of new higher lows.

Additional reference posts on “Angular Momentum” are available through prior update links:

Interesting Angles of Ascent in AutoZone (AZO)

S&P 500 and Angular Momentum April 29, 2011

Short Term Angular Trendlines in Gold and Crude Oil April 12, 2010

SPY Trendline and Angular Momentum Bull/Bear Psychology (good introduction post)

For even more educational references (and to see how prior examples played out), see any number of prior posts on this concept of “Parabolic/Arc Trendlines:”

“March Crude Oil Structure and One of My Favorite (Arc) Patterns”

“March Check-up on (Intraday Arc Trendline) Internals at the Highs”

Arc Trendline on the Weekly US Dollar Index (still in motion)”

Key Inflection (and Arc Trendline Lesson) in Apple AAPL” (great lesson)

The Dominant “Arc” Trendlines to Watch this Week in Gold

Intraday Rounded Arc Playing out (SP500)

Lesson in Trading Intraday Arc Trendline Breaks/Reversals

Gold Trapped Between Rounded Arc Support and Horizontal Resistance

Log-View of the Arc Trendlines on the US Market Indexes (April 2010 ahead of “Flash Crash”)

Updated Arc Patterns on the US Indexes (again, ahead of “Flash Crash”)

Sell-off in Crude Oil from Intraday Rounded Reversal (May 10, 2010)

TLT “Arcs” Down into Support

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning parameters as we watch a “hold and bounce” or “break and retrace” scenario play out in the near future.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

4 Comments

4 Responses to “Amazon AMZN and the Ongoing Parabolic Arc”

  1. intraday Trading Says:

    i am also showing this graph for my Knowledge in stock advice for intraday

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  3. Gold Threatens Fresh Breakdown into Open Air | Matt Watterson Says:

    […] my prior post “Amazon and the Parabolic Trendline Arc” for a plethora of links to prior educational posts/examples for the “Arc […]

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