Trading the Amazon AMZN Retracement to Start December

Dec 3, 2013: 11:52 AM CST

Strongly trending stock Amazon.com (AMZN) is currently pulling back in retracement mode after six straight days of upside gains.

Let’s take a look at the current pullback, note key target levels, and plan for contingencies if the strong trend resumes before downside trading targets are achieved.

Amazon.com Amazon stock AMZN Trading Amazon Retracement Flag PullbacK Trend

In the context of pro-trending stocks, especially those “strong and getting stronger,” we typically look to put on positions (buy) on pullbacks to rising trendlines, moving averages, or even Fibonacci Retracements (for advanced traders).

Right now, Amazon.com shares are pulling back or retracing down from the recently achieved $400.00 per share high and they’ve done so on a gap-up and reversal intraday pattern from the “round number” target level.

A simple glance at the Daily Chart shows us that a logical first downside support target would be the confluence of the November swing high (note red reversal candles) into the rising 20 day EMA overlapping $370.00 per share.

A failure (breakdown) under $370 per share suggests a deeper pullback may continue toward $350 (let’s not get ahead of ourselves yet).

We can drop the perspective to the intraday chart for more detail in strategy planning:

Amazon.com Amazon stock AMZN Intraday retracement pullback trade set-up with Fibonacci Retracement Target Price Levelvs

We look to the intraday or lower frame chart to see additional details – and potential ‘overlap’ of indicators/target levels – that we can’t see on the Daily Chart.

The main focal point of the Daily Chart is the $370 per share target level, we see one more potential support target which is near $375 or the 38.2% Fibonacci Retracement.

While not guaranteed, it would be logical to see a pullback to the confluence (overlap) of the 50% or “halfway” Fibonacci Retracement into $370 which develops into the mid-November high and the 20 day EMA.

Amazon.com (AMZN) shares would generally be expected to trade logically into the $5.00 zone between $370 and $375.

A failure for this logical outcome to happen – meaning buyers step in ahead of these targets to continue the uptrend – would suggest additional strength yet to come (targeting a breakout above $400).

A deeper pullback and breakdown under $370 would send the opposite trading (supply/demand) message, arguing for a potential downside play toward $350.

Continue updating your charts and monitoring price action toward these levels.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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3 Comments

3 Responses to “Trading the Amazon AMZN Retracement to Start December”

  1. Level Watching and Swing Trade Planning for Amazon AMZN | Afraid to Trade.com Blog Says:

    […] Swing traders have an opportunity to play either an “alternate pro-trend breakout” or a “logical counter-trend retracement” opportunity developing into the current $400 per share “round number” reference level similar to what I covered in the prior update Trading the Amazon AMZN Retracement to Start December. […]

  2. Matt Watterson Level Watching and Swing Trade Planning for Amazon AMZN Says:

    […] Swing traders have an opportunity to play either an “alternate pro-trend breakout” or a “logical counter-trend retracement” opportunity developing into the current $400 per share “round number” reference level similar to what I covered in the prior update Trading the Amazon AMZN Retracement to Start December. […]

  3. Level Watching and Swing Trade Planning for Amazon AMZN Says:

    […] Swing traders have an opportunity to play either an “alternate pro-trend breakout” or a “logical counter-trend retracement” opportunity developing into the current $400 per share “round number” reference level similar to what I covered in the prior update Trading the Amazon AMZN Retracement to Start December. […]