Usman Salis
Amazon's stock is currently experiencing significant pressure as it struggles to maintain momentum above its short-term moving averages. With the stock trading below declining technical indicators, investors are closely monitoring whether AMZN will find support at current levels or continue its descent toward longer-term averages.
Current Technical Situation
Amazon (AMZN) continues to face headwinds as it trades below its declining 5-day simple moving average, signaling short-term weakness. Market analyst Gabriel Lupu recently highlighted this concerning technical pattern, noting that the stock's inability to reclaim this key level raises questions about potential further declines toward the 200-day moving average—a benchmark closely watched by institutional investors.
The 30-minute chart reveals a steady decline from $236 to approximately $220, with each attempted recovery being rejected near short-term moving averages. Current support appears to be holding around $220, where the price has found temporary stability after several retests. However, short-term resistance remains firmly established between $227-$230, coinciding with the 5-day moving average.
Technical indicators paint a mixed picture, with the MACD showing weak momentum and limited buying interest. This suggests that any near-term recovery may face significant challenges. A decisive break below the $220 support level could trigger additional selling toward $215, while a sustained move above $227 would represent the first meaningful sign of potential trend reversal.
Market Dynamics Behind the Decline
Several factors are contributing to Amazon's current weakness. Valuation concerns have emerged after the stock's strong performance earlier this year, leading to increased profit-taking among investors. Additionally, broader macroeconomic headwinds, including rising bond yields and shifting Federal Reserve rate expectations, are weighing particularly heavily on growth stocks like Amazon. The ongoing sector rotation, with investors moving capital toward defensive plays and energy stocks, has further pressured technology names.
Looking Ahead
The $220 level represents a crucial battleground for Amazon's near-term direction. Should buyers successfully defend this support zone, a potential rebound toward $230 becomes possible. However, failure to hold above $220 could accelerate downward momentum toward the 200-day moving average, making the remainder of October a pivotal period for determining the stock's intermediate-term trend.
The ongoing tug-of-war between current support levels and longer-term technical benchmarks will ultimately determine whether Amazon can stabilize at these levels or faces additional downside pressure in the weeks ahead.
Usman Salis
