Last updated on May 7th, 2023 at 01:35 pm
In this blog post, we will look at Amazon stock (AMZN) on a weekly stock price chart. We will be using technical analysis to find out when it might be a good time to buy or sell the stock.
The first step in technical analysis is to identify the trend. Upon examining the weekly chart of AMZN, we observe that the stock had seen a free fall in 2022. However, since the start of 2023, the stock is attempting to bounce of off the lows.
Support and Resistance Level
First, we can locate the crucial support and resistance levels on the weekly chart. The support level indicates the price at which buying pressure is expected to arise. While the resistance level denotes the price at which selling pressure is expected to emerge.
Based on the weekly chart, there appears to be a significant resistance level at approximately $105. This is followed by resistance from the 50 weekly moving average and 200 weekly moving average at $107 and $131, respectively. Therefore, for the stock to enter a complete bull trend, it must close above $131.
Additionally, there is an upward sloping resistance (currently ~$98) developing since the start of 2023. The stock has been striving to break out of the initial resistance level since a while. From the pattern, it appears to be on the verge of doing so due to the formation of an ascending triangle.
Technical Indicators
Technical indicators can also be used to identify potential entry and exit points. In this analysis, we will be using the moving average convergence divergence (MACD), relative strength index (RSI) and stochastics.
• The MACD, a dependable metric for evaluating trends and stock momentum, indicates a bullish trend as the violet line has been above the orange line for weeks. Since these lines are still in the bottom band of MACD, it seems likely that the stock will move up in the coming weeks.
• RSI is another effective tool for determining whether a stock is overbought or oversold. When the RSI crosses above 30, it indicates a buy signal, and when it crosses below 70, it indicates a sell signal. The RSI is currently trending upwards and is around 50, suggesting that the price may rise further.
• Stochastics, another technical indicator, can help investors predict whether the stock will continue in its current direction or undergo a trend reversal. When the black line crosses over the red line, it is considered a bullish sign and vice versa. The black line has been above the red line for some time, but it is now intersecting the red line. However, that value is around 60, and it still has 20 more points to go before any meaningful conclusions can be drawn about a trend change. Therefore, the stock may continue to rise or trade sideways.
Should I buy Amazon stock now?
After analyzing the weekly chart of Amazon stock, it appears to be trading within a narrow range of support and resistance. The technical indicators suggest that the stock may soon break through the resistance level and continue to rise. This is indicating that we are currently in a buy zone.
Medium to long term investors can buy or accumulate more stocks in the range $98 to $107.
As with all investments, it is important to conduct your own research and analysis before making any trading decisions.
