Amazon (AMZN) - Highlighting Next Area For Buyers

We recently wrote an article explaining why Mr Jeff Bezos had nothing to worry about after being down $45B in October’s market sell off and also stated the obvious fact that trend in Amazon (AMZN) is up and pull backs are a buying opportunity. AMZN reached our blue box area starting from $1477 at the end of October and buyers were waiting there as expected. We keep mentioning that once a blue box is reached, two things can happen, either the trend will resume or there will be a minimum 3 waves reaction from the blue box to allow the longs to eliminate risk on the trade by trailing stops or booking partial profits and then trailing stops. Amazon bounce quickly reached 50% Fibonacci retracement of the decline from 9/4/2018 peak which was good enough for the longs from $1477 to get risk free. However, sellers have managed to push price below 10/30/2018 low which creates an incomplete 5 swings sequence down from 9/4/2018 peak. Let’s take a look at the chart below

Amazon (AMZN) Elliott Wave Analysis - Daily Time Frame

Break below 10/30/2018 low opens up extension lower in Amazon stock. Cycle from red x peak at 11/8/2018 has either already ended at 1420 or would end between 1420 - 1348.39 followed by a bounce which should fail below 11/8/2018 (1784) for another sell off toward 1212.32 - 855.98 area to complete a double three Elliott wave structure down from 9/4/2018 peak. Wave ((X)) bounce should see short-term sellers appearing in the sequence of 3, 7 or 11 swings while area between 1212.32 -855.98 should attract swing traders as that’s where we have our blue box and to add to that, at 1212.32, Amazon would have lost 40% of it’s value from the all time high of 2050 in September 2018 which means sentiments would be extremely bearish and that should further add to the bullishness of AMZN stock in the above mentioned area.

Short term Elliott Wave View in Amazon (ticker: AMZN) suggests that the bounce to 1784 ended Cycle degree wave x. Cycle degree wave y is currently in progress lower as a double three Elliott Wave structure. Down from 1784, Primary wave ((W)) ended at 1420 and Primary wave ((X)) bounce is in progress towards 1631.54 - 1712.09 area before the decline resumes. Internal of Primary wave ((W)) unfolded as a zigzag where Intermediate wave (A) ended at 1546.51, Intermediate wave (B) ended at 1624.82, and Intermediate wave ( C ) ended at 1420.

Internal of Primary wave ((X)) is unfolding as a double three Elliott Wave structure where Intermediate wave (W) ended at 1550 and Intermediate wave (X) ended at 1502.10. Expect the stock to extend higher in Intermediate wave (Y) of ((X)) towards 1631.54 - 1712.09, then as far as pivot at 1784 high stays intact, the stock should extend lower or pullback in 3 waves at least. We don’t like buying the proposed rally.

AMZN 1 Hour Elliott Wave Chart