Amazon – Technical Analysis – $AMZN
Since our May 12 call, Amazon is down 7% and roughly 10% off the top. The question now is whether the stock has corrected enough to support a rally, or whether the technicals still point to more work below.
Amazon’s importance goes far beyond its own chart. As a heavyweight component of both the S&P 500 and Nasdaq, AMZN can meaningfully influence index momentum, market breadth, and overall risk appetite. That makes the current setup relevant not only for Amazon holders, but for the broader market as well.
Ending Diagonal
So far, Amazon is tracking the roadmap nicely, and the sharpness of the decline indirectly supports the Ending Diagonal hypothesis. The 1- to 5-day frames remain bearish, with fair chances for further escalation.
The most concerning part is the wave structure. As shown on the chart below, the very first wave off the top can be broken down into an impulse. The second impulse, which is developing now, has technical support as wave 3 of some degree. If it extends lower, it would open the door to an impulse of a higher degree, as shown in red.
In that case, the larger impulse would likely be only wave (a) of a broader correction, meaning Amazon could still have more work to do before a durable bottom is formed.
