Trading Amazon Stock Into Next Week's Prime Sale

-- Amazon will hold its second Prime sale of the year later this month. Here's how the charts are shaping up now. --

By Bret Kenwell, TheStreet.com

Amazon (AMZN) has been a really interesting stock so far this year. And it is starting to show some resilience.

Perhaps that resilience stems from the approaching holiday season. Maybe it's that the tech and e-commerce giant has a second Prime sales event planned for next week - the first time it's had two Prime sales events in the same year.

Amazon's business has been a mixed situation. While its e-commerce leg has struggled with inventories - as have most retailers - and with concern about consumer spending and inflation, Amazon's cloud business has been robust.

Plus, don't forget about the 20-for-1 stock split it did this year.

Put it altogether and we have a stock that is now holding up better than it was earlier in the year. It's one of the few megacap tech stocks that hasn't retested its 2022 lows.

Of the four U.S. companies with a market cap in excess of $1 trillion, just Apple (AAPL) and Amazon avoided a retest of this year's low.

Trading Amazon Stock

Weekly chart of Amazon stock

Chart courtesy of TrendSpider.com

Through the first quarter, Amazon stock held the $140 to $145 support area. Once that support zone failed, though, the stock took a quick trip down to the low $100s, which in 2020 was a major breakout area.

After that zone held as support, it kickstarted a big rally back to the prior support zone between $140 and $145.

Since it has retreated, Amazon is sort of trapped between major support and current resistance.

Last week, we got an inside week, where Amazon's entire trading range for the week was contained within the prior week's range. Now that the stock is rotating above last week's high, traders are looking for more upside.

Despite the bullish development, the shares are at a notable area: The declining 10-week and 21-week moving averages are nearby.

If Amazon stock can clear these measures, the door opens to the 200-week moving average and the 50% retracement near $130. Above $133.50 and the $140 to $145 zone is back in play, along with the declining 50-week moving average.

If Amazon fails to press higher from here, keep a close eye on the $112 to $113 area, which was support for the past two weeks. Below that puts the vital $100 to $102 area back in play.

If we revisit the latter zone, long-term investors may consider accumulating a position.

From TheStreet.com