Christian Tharp, CMT
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Christian Tharp, CMT in Trading Made Simple,

Easy Trade of the Day:

Support for AMZN’s pullback

 

(Insert chart AMZN)

AMZN had been pure money up until its peak towards the end of December, but from there, the stock suffered is biggest pullback in quite some time. Then, as AMZN rallied back up in March, the stock ended up stalling at the same $580 (green) area that it hit as resistance back in July and October (red). Now that AMZN has broken above that $580 area, we’d expect it to act as support on any pullbacks.

The Tale of the Tape

AMZN has a key level to watch at $580. A long trade could be entered on a pullback down to that level, with a stop loss placed under it. A break of the $580 support should lead to lower prices.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT