Amazon, one of the trillion-dollar companies, has been on a bull run since past few months.

Technically, DAILY time frame will be analyzed for going long. We won’t be looking for shorts on Amazon given the long-term outlook on the fundamental company aspect.

- Market structure: Amazon has had a strong bull run with creating new higher highs and higher lows. It broke the $3500 resistance level with force. What happened lately on the stock is that it gapped downwards towards the $3290 area. This gap landed perfectly on the daily support. Usually, gaps which are not aligned with the trend are tend to fill. In this case, the gap fill will be on a bullish side.

- Trendline: An ascending trendline, which is considered a support trendline is currently tested the market at the support level. Candles were unable to break the trendline, hence no validation.

- Retracement: The golden retracement area of 75-78.6% aligns perfectly with the support level formed. This area in confluence with the retracement levels has a high strength to push the market up.

- EMA's: Both EMA’s are bullish as the death cross remains bullish. The EMA 50 was broken by the gap move but the EMA 200, still remains bullish. We anticipate the retest of the EMA 200 at the support level which happens to be in confluence with the support, retracement and trendline.

- RSI/CCI: Both RSI and CCI went to the extended over-sold region. RSI dropping to 29 level and CCI to 300. At this level, Amazon pounced back up due to the over-sold pressure being waved off. What we can evaluate on the oscillators right now are two situation: either one of the oscillator forms a divergence buy at the support or, either or both of them cross the neutral region of 50 and 0 respectively.

Amazon has a high potential to go bullish from the current levels. The reason for this is the 4 confirmations which completely confluence with one another. Buying at this level gives us a risk to reward ration of 1:1.42

AMAZON gap correction

Aug 09 2021

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