What you need to know
- Amazon shares hit another record high Thursday, bucking the broader market's downturn today and boosting their year-to-date gain to 45%.
- A new supercomputer was announced by the company and it has had an outstanding start to their holiday season.
- Amazon shares have retested last month’s breakout area, before continuing higher. The stock is now in a longer-term trend of upward movement.
- According to this principle, the upward target for stock is $250. It’s calculated by adding the amount between the two ascending trendlines of the triangle and the pattern’s break-out area.
- Investors should watch major support levels on Amazon's chart around $200, $190, and $175.
Amazon’s (AMZN), shares reached another record-high Thursday. They bucked the market downturn and increased their gain year to date by 45%.
The tech giant announced on Tuesday that it is building a supercomputer based on its own Trainium chips. This will be used by the artificial intelligence start-up Anthropic. According to a report in The Wall Street Journal, the move positions the company to take on AI favorite Nvidia (NVDA) in the lucrative graphics processing unit (GPU) chip market.
This week the online giant also reported record numbers of sales, and the total number of items, at the start the holiday shopping period. They said the majority of their sales was from independent vendors.
Amazon’s gains so far in 2024 have handily outpaced the S&P 500’s return of about 27% over the period. Stocks rose by 1.1% on Thursday to $220.55.
We analyze Amazon’s technical chart below and highlight key levels of price that investors should be aware of.
Retest Ascending Triangle
Amazon shares have retested last month’s breakout area, before continuing higher. The stock is now in a longer-term trend of upward movement.
While the relative strength indicator (RSI), which has a reading of above 60 confirms a bullish trend, it is below the overbought level, so there’s still room for the stock to move higher before consolidating.
We’ll look at the chart of Amazon to identify three key support levels and a possible price target. These are likely to attract buyers during a pullback in stock.
The Upside Down Price Target
Investors can predict an upward target by using the measuring principal, which analyzes previous price changes to forecast future movements.
In order to apply this tool to Amazon’s chart we need to measure the distance of the two ascending triangle trendlines at their largest point, and then add the amount measured to the breakout pattern. Add $50 to 200 to arrive at $250. Investors can then decide where to place their profits.
Watch These Important Support Levels
First, you should monitor the level of $200. The second time around, there would be a lot of buying interest in the area near the top trendline of an ascending triangle. This could turn out to be a floor.
The shares could fall to about $190 if they close decisively below this key level. They may also find some support in the area near the trendline which connects several peaks formed on the chart from April through October.
A more dramatic decline may lead to a drop below $175. Investors may want to buy and hold positions near the multi-month line which joins similar trading levels from February through September.
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According to the article, as of its date of publication, the author did not possess any of these securities.
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