Ludvig from Australia

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Buying or Shorting Amazon (AMZN)? Technical support & resistance

November 10, 2020 00:41
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Amazon, amzn,

In this post, we will talk about the latest technical support and resistance for Amazon shares and how to get started buying or shorting this stock. Amazon has advanced from $2 300 above $3 500 in less than six months and the current price stands around $3 310.

A volatile market

The US stock market is easily affected by unpredictable events and there will be certainly lots of opportunities for shorting this stock. Amazon.com, Inc. offers a range of products and services through its Websites. Amazon is an example of how a good company can be expensive stock for investors. The fundamentals of the company are good but with 1661 billion USD market capitalization this company/stock is too expensive in my opinion. Despite this, Amazon stock is up more than 10% since the last week and this stock can be an opportunity for shorting. The attention of investors is also focused currently on the US elections and it is important to mention that the American dollar was the biggest loser this week. The US went to the polls on Tuesday, yet Saturday ends without certainties on who the 46th president will be. The tight race will be defined by a couple of states, and probably by the Supreme Court, as Joe Biden leads, but President Trump has introduced several lawsuits claiming electoral fraud. The ongoing election uncertainty together with the COVID-19 pandemic could add selling pressure for Amazon shares.

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How to short Amazon (AMZN)

Shorting the Amazon stock is basically betting against Amazon and when you short the AMZN you are expecting the price to go down instead of up. So you can make money when the price goes in the opposite direction and for those with great skill is a way to make some good money. One of the easiest ways to short Amazon is through a margin trading platform. Many brokers allow this type of trading, with margin trades allowing for investors to “borrow” money from a broker in order to make a trade. It's important to remember that there may be a leverage factor, which could either increase your profits or your losses. It’s not a good idea to hold a short position for long periods of time or to leave an open short position with no stop-loss order. Many exchanges allow margin trading but it is very hard to say which platform is the best because this depends on the experience and habits of each investor/trader. Another way to short Amazon is to sell this stock at a price you feel comfortable at, wait until the price drops, and buy the Amazon stock again.

Amazon.com, Inc. logo

Company Name: Amazon.com, Inc.
“Going long or short in Amazon shares? See the latest traded prices for Amazing shares here and where to trade it.”
Ticker: AMZN
Primary Exchange: NASDAQ
Latest price: 3185.07
p/e Ratio: 91.52

Technical analysis

The price of Amazon stock currently stands around $3 310 and at this value, the total market cap of Amazon is around $1661 billion.

On this chart (the period from November 2019), I marked current support and resistance levels that can help traders to understand where the price could move. The more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support is. When the price passes through the resistance, that resistance could potentially become support. Amazon stock remains in the „bullish phase“ and if the price advances above $3 400 the next resistance could be located around $3 500. The current support level is $3 200 and if the price breaks this level it would be a “SELL” signal and we have the open way to $3 000. If the price drops below $3 000 which represents very strong support, the next target could be located around $2 800.

Conclusion

Shares of Amazon have advanced from $2 300 above $3 500 in less than six months and the current price stands around $3 310. Amazon is an example of how a good company can be expensive stock for investors. The fundamentals of the company are good but with 1661 billion USD market capitalization this company/stock is too expensive in my opinion. The current support level is $3 200 and if the price breaks this level it would be a “SELL” signal and we have the open way to $3 000. If the price drops below $3 000 which represents very strong support, the next target could be located around $2 800. The attention of investors is also focused currently on the US elections and it is important to mention that the American dollar was the biggest loser this week. The ongoing election uncertainty together with the COVID-19 pandemic could add selling pressure for Amazon shares.

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