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Amazon Stock Reversal Signals – June 9, 2014



Amazon stock has been in a steady downtrend for the past four months but it appears that reversal signals are popping up. Price has started to break above the 50 SMA, which has served as a dynamic resistance for the pair since February. A strong breakout candle has already closed above this moving average, suggesting that more gains are in the cards.

However, price has yet to break above the 200 SMA or the moving averages have to make a new crossover before the rally is confirmed. MACD is also reflecting potential upward movement, as the indicator is moving out of the oversold area. RSI is in the overbought zone already though, suggesting that buyers might run out of steam pretty soon.

Amazon Stock Forecast

The next area of resistance for any short-term rallies in Amazon stock could be at the $340 level, which is right around the 200 simple moving average. There also appears to be a lot of interest in that area, as the level has acted as support and resistance in the past.

Recall though that Amazon stock could be weighed down by the current controversy surrounding the company. Some authors are calling for a boycott of Amazon services, as the company didn’t include or didn’t favor some publishing labels like Hachette. Even comedian Stephen Colbert has called for a boycott of Amazon products, which might later on weigh on Amazon stock prices.

Analysts estimate though that Amazon holds 65% of the share of the e-book market, which means that demand will remain very strong despite calls for a boycott or ongoing disputes. Its total revenues are estimated at $995 million, although sales have been dropping in the past year.

An end to the controversy could see Amazon stock prices higher, perhaps spurring a break past the $340 mark and going for the $400 levels again. If all this proves to be a simple market correction though, Amazon stock could still retest its former lows at $300.