Wednesday, June 30, 2010

Double Top - Amazon.com, Inc. (Public, NASDAQ:AMZN)

AMZN formed a bearish double top pattern over the last eight months, as depicted on the chart above. Yesterday, price broke out on strong volume. On a measured move, price should extend 100% of the depth of the pattern. However, we have the $100.00 round number at the 50% level and a gap fill around $94.00. A retest of the break-out point is common in these types of patterns (H&S, double and triple tops) allowing those who missed the initial entry a second chance to get in.

Today's day trade was an attempt to profit from yesterday's late session capitulation. The last two bars were a hammer and NRIB. Buy the break of the base. Look for a retracement back towards yesterday's recovery high and the downsloping 50 SMA.

The retracement was sharp, followed by a lengthy sideways chop until price met the 50 SMA and it proved too strong as resistance (matching consolidation patterns).


Short as depicted below for a round trip back to the base.

5 comments:

AQ said...

Jamie,

Double top can not be months apart.. However there is a dumpling top started from June 16 and confirmed on June 21.

With this recent price action; as you know that it was caused by the brake of the gap support around 115 created back in Oct 2009 and old support has become the new resistance now... naturally window must be filled and target on that is 95.

Jamie said...

AQ,

Good observations, but I'm not aware that there's a time element with respect to chart patterns. The only general rule I'm aware of is that if a pattern takes eight months to develop, then it should take approx. the same length of time to reach the full 100% extension. That rule was noted on this blog when the S&P formed an inverse H&S bottom in July 2009, over a period of 9 months. The full extension was reached, 9 months later in April 2010.

i_am_skinny said...

great analysis !!!

靜宸靜宸 said...

人生是故事的創造與遺忘。............................................................

Yarldi said...

Damn, you guys remind me of a couple of older ladies I knew who would swear to me that they could see patterns in the winning daily numbers of the state lottery.