Amazon Tight Range between the 50 and 200Day

Published on Monday, 30 August 2010 04:32 Written by Christopher Lynn

New York, August 30th (TradersHuddle.com) - Shares of Amazon.com, Inc. (NASDAQ:AMZN) closed the trading session at $126.64 near its 50 day and 200 day moving averages currently set at $121.33 and $127.73 respectively. Amazon's price action is above the 50 day moving average but below its 200 day moving average, which provide a nice trading setup, with clear reference points.

Amazon.com, Inc. (NASDAQ:AMZN) operates as an online retailer worldwide. The company serves its consumer customers through its retail Websites and focuses on selection, price, and convenience. It also offers programs that enable seller customers to sell their products on its Websites and their own branded Websites. One of the biggest seller items for Amazon is books and e-books, which can be read with Amazon's Kindle e-reader.

Amazon price action seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter Amazon with a small position and wait for the stock to break out above the 200 day moving average at $127.73, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 50 day moving average set at $121.33 breaks it could mean further downside in the horizon for Amazon.