Amazon.com, Inc. (NASDAQ: AMZN)

Amazon.com, Inc. engages in the provision of online retail shopping services. It operates through the following business segments: North America, International, and Amazon Web Services (AWS).

Take a look at the 1-year chart of Amazon (NASDAQ: AMZN) with the added notations:

1-year chart of Amazon (NASDAQ: AMZN)

During the course of the past year, AMZN had formed a very important level of support at $1700 (green). Yesterday saw the stock break below that support. Not only did that imply lower prices for AMZN, but the $1700 area will likely act as resistance on any future rallies.

The Tale of the Tape: AMZN broke a key level of support at $1700. A trader could enter a short position on any rallies up to or near $1700 with a stop placed above the level. If the stock were to break back above the $1700 level, a long position might be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT