A quick look at the Amazon chart. Buy or Sell?

The performance of Amazon (NASDAQ:AMZN) shares over time has been well documented, especially in comparison to traditional retailers. Ten years ago they were trading under US$100. However, with the price now over US$1500 and hitting record highs, are the charts providing us with any warning signs to take profits?

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Long term chart of Amazon

Amazon shares have been trending higher for the last 10 years. The 10-year chart may look as though it is getting a bit vertical and risky, but if we convert it to a log sale, you will notice that the trend so far still appears quite sustainable.

Amazon monthly log scale chart
Amazon monthly log scale chart


Current price action for Amazon

Moving back to a daily chart, price action becomes fairly interesting. We are well aware of the big falls in the US market during the early part of February 2018. Amazon shares were not immune, falling almost 10% in the space of 2 weeks. Since then however, US markets have recovered slightly, but Amazon is now trading at all-time highs. We have noticed that they fell back at the beginning of March to retest that prior peak (indicated by the horizonal line), and they have since displayed fairly bullish price action to launch higher once again. This sign of strength leads us to believe that the uptrend in Amazon is still strong, and investors could expect to see higher levels from here. For those who like tight stop losses, we would consider placing a stop just under trendline support at US$1450.

Amazon daily chart
Amazon daily chart



You can learn more about technical analysis in this article.


Michael Gable is managing director of Fairmont Equities.

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