AMZN: Falling Wedge Morph

From August 18, 2009 1:59 PM in the Comment Section on AMZN:

"AMZN rallied to within nine cents of filling the 82.78 gap and has fallen back below the Falling Wedge. That looks fine, as long as it isn't morphing into a larger Falling Wedge.

The next session was a CLOSE back above 84.60 - 84.45 (thin blue line), indicating that the Falling Wedge had, indeed, morphed into a larger Falling Wedge. It looks more like a Bull Flag or a Falling Channel than a Falling wedge, though. That was an "uh-oh" for The Bears because AMZN "shouldn't have" CLOSED back above that broken trendline, and it suggested a return to the top of the pattern, which is a validated trendline.

At Blue Data Point #4, the high was 85.60. The slope is -0.22857, so the trendline came in at 85.3714 the next day, August 13. The August 13 high was 85.37, smack on the trendline, validating it as resistance.

Thursday was another "uh-oh," as AMZN made further progress toward the top of the pattern. Friday, the top of the pattern came in at 85.00, and the Bulls banged away at it, trying to get through there, as we can see from this 5-Minute chart.

The Bulls got refused several times at 34.99, a penny below the trendline, for a second validation of that trendline as resistance. The Bears were able to knock it down mid-session, but in the late going, the Bulls brought it back and took out 85.00, but not with any conviction. AMZN settled at 85.00, smack on the trendline, so like Goldman on Thursday and like the SPX on Friday, it's champing at the bit for an upisde technical breakout.

The top of the pattern comes in today at 84.7714, so any opening above that puts AMZN over the trendline, but I wouldn't consider any down opening to be an upside technical breakout. That would simply be "falling over the trendline." If AMZN opens down, it would need to take out Friday's late session high of 85.06 at some point to look in any way sincere about a breakout.

UBS wasted a bullet by adding AMZN to its Strategic Stock Selection list the morning of August 14. The stock had just validated the top of the pattern as resistance, and had closed down on the session. The upgrade didn't move it higher. If UBS came out with that upgrade this morning, with AMZN poised for an upside technical breakout, that might have had a more postive impact on the stock. Maybe they'll "reiterate" before the open, or maybe someone else will pound the table on it. Analysts like to do that sort of thing ;)