An astute TSC member asked if Amazon was forming a Head & Shoulders chart pattern. A Head & Shoulders chart pattern is a bearish chart pattern that usually ends up in a nasty sell-off. The pattern has 2 shoulders and a head in the middle. Here is an illustration of a basic Head & Shoulders chart pattern.
So if Amazon is potentially forming this bearish chart pattern, it could be time to lock in gains if you haven't already. But before I get ahead of myself, let's review a couple of charts and see if that question can be answered.
Amazon's Head & Shoulders Chart Pattern
This first chart for Amazon (AMZN) is a 3 year weekly candlestick chart. I will start with a weekly chart since I feel that chart patterns are best looked for using weekly candlesticks.
When I look at Amazon's chart, I definitely see a Head & Shoulders chart pattern that the TSC member inquired about. Nice job on the analysis! Amazon has already formed the second shoulder and is currently sitting right on its neckline.
Fibonacci Extension Tools are one of the most important tools in my toolbox. The high for Amazon's share price reached during the week of July 24, 2017 was calculated EXACTLY by a Fibonacci Extension Tool. I mean to the penny.
Remember, the 3 areas to watch for reversals or corrections when using a Fibonacci Extension Tool are the 61.8%, 100% and the 161.8% Target Lines.
With AMZN's share price sitting right on the neckline, is it going to find support or continue the selling? The…...
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I continue the discussion regarding the Head & Shoulders chart pattern for Amazon (AMZN). Downside price targets are calculated for the pattern based on a confluence of bearish factors. I also discuss the amount of time required to let Amazon consolidate before purchasing shares to go long again.
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