Amazon.com, Inc (NASDAQ: AMZN) experienced an initial dip in Thursday’s trading session, only to rebound above Wednesday’s high-of-day. This shift followed the sale of 4,000 company shares by Doug Herrington, CEO of Worldwide Amazon Stores.
The rise in Amazon’s stock contributed to a slight upturn in the S&P 500, counteracting Apple’s initial drag on the index.
In terms of technical analysis, Amazon’s price action indicates recognition of a symmetrical triangle pattern by algorithmic trading. This pattern forms when a stock alternates between lower highs and higher lows, bounded by descending and ascending trendlines that converge to create an apex. It signifies a balanced struggle between bullish and bearish forces.
Symmetrical triangles typically manifest on lower-than-average trading volume and signal a period of consolidation, marked by reduced volatility. A notable surge in trading volume often accompanies the stock’s breakout from the pattern, typically occurring before it reaches the apex.
Amazon’s chart reveals its entry into a symmetrical triangle pattern on August 3, with consistent lower highs and higher lows. The most recent lower high occurred on September 1 at $139.96, while the latest higher low registered at $133.16 on Thursday.
Bullish traders hope for a breakout above the upper descending trendline of the triangle, potentially initiating a long-term uptrend. Conversely, bearish traders anticipate a breakdown from the pattern, potentially intensifying downward pressure.
The likelihood of an upside move increases if Amazon maintains its position above the 50-day simple moving average (SMA) on the daily chart. On Thursday, the stock found support at the 50-day SMA, rebounding from that level.
Amazon faces resistance at $136.83 and $142.18, with support at $131 and $125.93 below.