AMZN: Bullish Inverse H&S

From January 10:

"I have no idea whether AMZN will or won't move higher, so you see why I don't waste my time trying to predict anything. If I happen to be FOLLOWING it and think that I have a play, I'll go ahead with it."

Basis the intraday chart, AMZN broke out of this little bullish Inverse H&S pattern, putting an upside target of roughly 180.48 IN PLAY.

178.79 - the more conservative of the neckline highs
177.10 - the low of the Head

178.79 - 177.10 = 1.69 points of upside on a breakout above 178.79

178.79 + 1.69 points = Target: 180.48 IN PLAY

Since AMZN has had a Falling Wedge breakout in the daily chart and a successful retest thereof (see daily chart posted January 10), I bought AMZN at 179.27 on the early selloff to the EMAs and back toward the neckline breakout.

The target al-llmost got MADE, but then AMZN sold off and went back below the neckline and back toward the 178.16 low of the Right Shoulder (horizontal red line), for "Ye Olde Knuckle-biter." UGH.

After an Inverse H&S breakout, the Right Shoulder low "shouldn't" get taken out prior to the target being achieved. If it does get taken out, I throw it in. I might give it a penny or three to allow for a shakeout, but not much more than that.

As we can see, the retest of the Right Shoulder low (horizontal red line) came mighty close to failing! It's a very good idea to have our sell orders filled out and hands on the buzzer on a retest like this because if support gets busted, the stock can go down in fast market conditions.

Fortunately, in this case, support held and I was able to sell into the rally at 180.35 as the Inverse H&S target of 180.48 was getting MADE. There's a pretty big spread between the BID and ASK in AMZN so I don't play around with limit orders, insisting that I get exactly 180.48 for my shares. Take the money! LOL.

The session high of 180.77 was slightly higher than the target. AMZN sold off from there and closed down on the day, at 178.90.



Gain: $1,600

For any new readers, I occasionally post trades like this one when I have the time and when I think that they're instructive. By no means am I posting all of my trades and I do have my share of losers, just like everyone else.

My MAIN purpose when I post is to share with others things like how to look at the patterns, how to establish targets and how to manage the trade. I didn't predict that the 180.48 would get MADE. I only made a play at it based on the bullish Inverse H&S pattern breakout in this intraday chart, knowing that we also have had a bullish Falling Wedge breakout and a successful retest of that breakout in the daily chart. Based on those bullish factors, I was favored to win on the trade, but I sure don't always. That Right Shoulder low just as easily could have gotten busted, in which case I would have taken the hit and moved on to planning my next trade.

That's of paramount importance when trading: "Have a plan."