I shorted AMZN a week ago because of 3 bearish factors:
1. The Bearish Island Reversal, on July 24.
2. Kevin's possible Bearish Wolfe Wave (see chart posted on August 3).
3. The late July Bear Flag.
The Bear Flag (in purple) broke down on August 3, crossing the lower trendline at 85.966. The next session, AMZN was down pretty good, but it didn't make it to the 82.60 target, the bottom of the Bear Flag. It held at 83.02, double bottomed there the next session with a low of 83.05, then was back in my face on Friday's jobs report on a print high of 85.96, the exact number where it broke down below the Bear Flag. I hate it when that happens. Curses! LOL.
In yesterday's going, I decided to "take the money" on the selloff.
While the downside Bear Flag targets still are IN PLAY, this sideways trading has me thinking that AMZN might make a bid for the Island Reversal gap, and possibly morph the Bear Flag into a Symmetrical Triangle, or a larger Bear Flag, in the process.
Gain: $2,100
2 comments:
melf,
today amzn made the 82.60 target. It then moved back above 83. I am curious what happens after a target gets made?
if the stock hits and continues to the downside, vs if it makes the target and then bounces?
does the target then become support/resistance?
I don't know if there's anything to be told about what happens afterwards...
Kevin,
Those are good questions which I'll address in tomorrow morning's post with specific chart examples on AMZN.
For now, whether or not the target becomes support or resistance depends on what the chart looks like. For example, AMZN currently has double-bottomed at 82.60 (July 28 low) and 82.45 (today's low), and has rallied to 83.70, so far. If those lows get taken down, 82.45-82.60 "should" act as initial resistance on any rally because right now, it's acting as support and "former support 'should' become resistance, if broken."
On the other hand, let's say that AMZN had blown right through the 82.60 target on July 28. There wouldn't be as much reason to expect 82.60 to be resistance because it never acted as solid support because, in this example, it failed.
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