Amazon (AMZN) is at the first of two important trend line support levels. The weekly chart shows the stock price testing, for the third time this year, a long term uptrend line drawn off the lows since 2012. It fell through that support during the two previous tests but managed quick recoveries. A closer look at the same chart also shows the formation of a large symmetrical triangle over the last six months, with the uptrend line being the second key trend line. The dashed red line dissecting the triangle is a regression line, or best-fit straight line of closing price within the pattern. The uptrend line, the 10 week (50 day) moving average, and the regression line are all intersecting, and a violation of this area takes out the first key level of support.
Another break is less likely to see a quick recovery this time, and more likely to initiate a test of the triangle uptrend line, and a breakdown from pattern support projects a significantly lower price for Amazon stock. The price and money flow momentum indicators are still trending higher, but keep an eye on those support lines because indicators lag price.
