In today's Talk of the Day, we analyze Amazon, which has been experiencing a bearish correction since December 16th. This correction has taken the form of a falling wedge, a classic technical pattern, marked with blue lines on the chart. Wedges like these often signify potential reversal setups, making this situation intriguing.
The wedge has brought the price down to a key support level, defined by the long-term uptrend line that has been connecting higher lows since August 2024. This confluence of the wedge’s lower boundary and the uptrend line forms a critical area of decision for Amazon's price movement.
As long as the price remains above the lower wedge boundary and the uptrend line, the sentiment remains positive, with a strong possibility for a bullish rebound. This setup suggests that Amazon may be preparing for a fresh upswing in the coming sessions.
However, if the price closes below both the wedge’s lower line and the long-term uptrend line, it would invalidate the bullish potential. A breakdown from this area would serve as a strong sell signal, pointing to the likelihood of further downside. Nevertheless, the chances for this bearish scenario currently appear limited, given the support strength.