AMZN is retesting the previously broken downside resistance. A recent bounce from 81.30 is leading Amazon stocks higher for a retest of a previously broken strong downside resistance of 102.53 which we can see clearly on the monthly chart and also a possible huge long-term H&S formation.
The weekly AMZN chart shows a triangle that can be defined as a downtrend continuation triangle at this stage. The lack of a significant break above 102.50 opens the door for a possible reversal lower and a test of 93 which is a downside resistance. Now only a break above 107 will invalidate the short-term downside, and a break below 100 is required for a nice short trade.
As the famous trader says…
“Novice Traders trade 5 to 10 times too big. They are taking 5 to 10 percent risk, on a trade they should be taking 1 to 2 percent risk on.“
Bruce Kovner
How to trade this?
Obviously, for Q3 2023, we have this upside resistance of 107 which should be broken higher for an upside continuation. This means that now short trade entries have some advantage over long trade entries as the overall long-term trend is still a downtrend. You should open a short trade here first. The risk to reward on this trade is higher than 1 and the timing of the trade could be on Monday NY session with the stop loss above 105.60 to target the first 92 and if broken 80.
