Amazon on the Verge

Published on Tuesday, 12 January 2010 10:18 Written by Christopher Lynn

New York, Jan 12^th (TradersHuddle.com) – Shares of Amazon.com (NASDAQ:AMZN) continued to be under pressure this morning, as the stock is being hit by an onslaught of profit taking. Amazon shares have been down of 5 out of 7 trading days this year.

The chart formation in Amazon is not encouraging as the stock was not able to get above its previous all time high, and now is struggling to hold support. Although Amazon stock price dipped below the $130 level, traders are looking at $125 as their point of reference, given that this is the level from where Amazon was able to bounce back.

If the $125 level gives the stock will be in free fall towards the $110s, basically booking a full roundtrip from where is started after beating estimates.

The 20 day moving average in Amazon’s chart is starting to turn bearish as well, given that is developing a negative slope. However, the fundamentals in the stock should translate into a good technical pattern once the profit taking subsides, which in turn will provide traders with another good opportunity to enter this stock.