COTD: AMZN – Can Amazon Continue To Ride Pandemic Waves?

AMZN – Daily

Amazon.com (AMZN) –

As a retail conglomerate, it doesn’t get much bigger than Amazon listed on the US Nasdaq exchange. Despite all the pandemic problems, AMZN found itself uniquely positioned to be one of the few companies able to maintain the status quo and even thrive amongst an already weakened retail sector. 

At the beginning of this month, something quite significant occurred in the daily chart above. For the first time since March, the validated bullish trend line supporting the stock throughout 2020 thus far gave way and took the price down with it from $3,300 to $2,871 per share. 

Some would argue that this sudden price drop demonstrates systemic problems within the retail sector itself, and this event was bound to happen sooner or later. However, when we apply the Ichimoku indicator, we start to see a different story emerge. It suggests the recent price fall may only be a temporary blip for Amazon and its dominance in this space remains intact.  

For starters, the longer-term lagging span (purple line) remains above the cloud, providing us with confirmation of a bullish stance. Next, we have strong evidence that price action respects the Ichimoku indicators as per the clear bounce from the bottom of the cloud support at $2,890. And lastly, the cloud’s current overall thickness hints at good support for the stock going forward. 

As we enter the fourth quarter, undoubtedly, most retail activity will continue to experience difficulties due to issues surrounding COVID-19. Even Amazon may not be able to deal with some unforeseen outcomes of the changing retail landscape. In the meantime, I suspect we may see a return to this longer-term bullish activity, albeit in a slower-paced manner. Remember, before March, the trend mainly consisted of a consolidated ranging pattern throughout 2019. Without any further shocks to the market, the stock may end up defaulting back to this behavior. 

In summary, based on the Ichimoku data, a potential return to the $3,400 region seems reasonable, with key support for the stock located around $2,880 and $3,200, respectively.