Analyzing Amazon's Stock Dynamics Post-Earnings Report

Amazon’s Share Performance in the Spotlight

In after-hours trading on Thursday, Amazon’s stock took a hit following the company’s announcement of cloud computing revenue that didn’t meet expectations, combined with a lukewarm forecast for the current quarter. These developments have cast doubts over a potential retest of the stock’s lower trendline in a rising wedge pattern by Friday’s market open. Amazon’s chart identifies essential support levels around $230, $216, and $200. Should the stock pivot back to its longer-term upward trajectory, investors are advised to keep an eye on a price target of $290.

Amazon’s stock has soared approximately 9% since the beginning of the year and boasts a more than 40% increase over the last year. These gains significantly outstrip the S&P 500, which has returned 3% year-to-date and 23% over the past 12 months.

Examining Amazon’s Chart: Technical Analysis Insights

Amazon’s shares have been on the rise since last July, moving within a rising wedge pattern with consistent support near the pattern’s lower trendline and the 50-day moving average. Recently, stocks approached the wedge’s upper trendline, yet failed to achieve a definitive breakout before the quarterly earnings release.

Additionally, despite hitting a new high earlier this week, a bearish divergence emerged as the relative strength index didn’t follow suit, signaling declining buyer enthusiasm. This contributes to the anticipation of a retest of the rising wedge’s lower trendline with Friday’s expected lower opening.

Critical Support Levels to Keep an Eye On

Initially, the $230 mark is crucial, albeit the stock might open underneath this level on Friday, it could potentially attract buyers at the lower trendline of the rising wedge pattern.

If bulls can’t safeguard this position, the stock might decline to roughly $216. This price point could provide support, aligning with the November highs and January lows.

Should there be a deeper drop, the psychological benchmark at $200 gains prominence. This zone might become a buying opportunity, aligning with the early July high and late November low, closely aligning with the 200-day moving average.

Monitoring a Long-term Price Target: The Measured Move Approach

Using the measured move strategy, investors may predict a potential future price target should Amazon’s stock resume its upward course. Often referred to as the measuring principle in chart analysis, this method involves calculating the depth of the rising wedge and adding it to the breakout point. Using this approach, adding $50 to the $240 level results in a forecasted target of $290—an attractive point for potential profit-taking.