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Venturing Into The Amazon (AMZN)

 February 14, 2012 06:14 PM

If you've followed Amazon.com (AMZN) for any significant amount of time, you'll know that over the past year or so it has seen some of the most dramatic ups and downs in the stock's history. 

Here's the nitty-gritty on the stock: 

  • Text book inverse head and shoulders pattern in place but not yet confirmed (Pending Bullish)
  • Found support at the convergence of the 10, 20, and 50-day moving average (Bullish). 
  • 200-day Moving average looming overhead at around $201 (Bearish).
  • Accumulation after breaking the downward trend off of the October highs (Bullish)
  • Unfilled gap in the chart from 10/26 (Bullish)
  • Has yet to put in a higher-high on the chart (Bearish)

[Related -Updating Amazon AMZN Gap into Fibonacci Support]

So here are the trade parameters I'd use.

  • Entry Price: Wait for a break of the IH&S neckline at around $196-197.
  • Stop-Loss: Tight Stop-Loss would be $186.50, wider stop-loss would be below the right shoulder at $181.64.
  • Target Price: First target would $211.50, followed by the October gap fill at $227. 
  • Time-Frame: If the Market cooperates and continues to push higher, I would envision this stock being held 2-4 weeks if it doesn't get stopped out before then. As always tighten the stop as you increase the gains. 

[Related -Amazon.com, Inc. (AMZN) Q4 Earnings Preview: Will Amazon's EPS Top Street?]

Here's the Chart-Markup:

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