The week of May 8th should be action-filled for the short-term trader. But there's plenty here to also satiate the longer-term trader's risk appetite.
On the daily time frame in chart #1, a TD Sequential Sell 9-13-9 Sell signal is present, and hence the potential for short-term profit taking down to as low as $137. This should get underway starting at either ~$151.36 or $155.62. At the same time, I must be prepared to be wrong because as depicted in chart #2, Thursday's session registered a '5 percent day' whose range was exceeded on Friday. (Note that '5 percent day' sessions usually mark sustainable turning points (in either direction) unless they happen to occur near exhaustion points; such was the case with $GOOGL a few weeks ago.)
In chart #3, yellow wave 3 and purple wave 5 have coinciding targets (Fibonacci cluster). If the 'profit taking' scenario is indeed in store, the first downward reaction should find support in the [$147.90 - $149] range; should the forecast be confirmed in the coming days, the next buying opportunity should occur near ~$137. Ultimately, purple wave 5 should have its sights set on [$170 - $175].
Chart #1. Daily time frame.
Chart #2. Market profile chart (aka. the auction market place chart).
Chart #3. 30-minute time frame.
I'm taking a top-down approach here, starting with the weekly time frame in chart #4. Clearly, the multi-month rally is struggling just below the upper trendline of the yellow rising wedge. The question, of course, is whether purple wave 3 is in the process of terminating in the Fibonacci [2.618 - 2.764] zone. To answer this question, I had to dial down to the daily time frame in chart #5 in order to dissect the rally since December 2016. What I found out is quite fascinating... and very long-term bullish. In the short term, however, the wave pattern suggests the stock completed a double-zigzag on Friday (see chart #6), leaving behind an inverse Head-and-Shoulders pattern. In the coming days, $AMZN should print an interim top near $959 before embarking on a multi-week pullback. But make no mistake about it; another buying opportunity should present itself in the [$890 - $900] range, and upon touching the bottom trendline for the third and final time.
Referring to chart #7, the short-term bullish case will initially be confirmed upon a move north of $938, and subsequently $945.
Finally, though I'm not showing it here, the rally from February to October 2016 counts as the first wave of an even larger degree of trend, and it has an associated third wave target of ~1370, which is precisely the measured move of the yellow rising wedge. But that's a couple of years away, and hence we'll circle back to it at a later time.
Chart #4. Weekly time frame.
Chart #5. Daily time frame.
Chart #6. 10-minute time frame.
Chart #7. Market profile.
I'll begin with the monthly time frame shown on chart #8, noting the recent channel breakout and the three-level wave interpretation suggesting an imminent takeout of the $1,000 level. As shown, red wave 3 and blue wave 5 have coincident targets at ~$1097. Bolstering this scenario is the weekly time frame in chart #9 depicting a rising wedge that recently resolved bullishly and has a measured move consistent with the said target.
Chart #8. Monthly time frame.
Chart #9. Weekly time frame.
In the short term, the stock closed 10 points off its high on Friday, and it should soon pull back some 30 or 40 points in the coming weeks. However, for this to happen directly from here, $947 must fail. Otherwise, expect $971 to be reached first. A close above the weekly POC of $950 would raise the odds of further short-term upside towards $971 before profit taking would take hold. The market profile levels are depicted in chart #10.
Chart #10. Market profile.
This one will likely bulldoze the shorts in the coming days, weeks, and months. Notice where support came at on the weekly time frame in chart #11. Here's what to expect this week: first, continuation towards $313.xx (chart #12), followed by short-term profit taking down to the $305. area. But what should ensue is a powerful move to [$320 - $328] that will likely lead to an eventual breakout to new highs (chart #13).
Chart #11. Weekly time frame.
Chart #12. Market profile.
Chart #13. Market profile.
Expect daily updates on this throughout the week.
Peter Ghostine (@peterghostine)
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