A very rare candle pattern has formed on the daily Amazon (AMZN) chart. It is called a bearish tri-star pattern and is considered a reversal sign.
The bearish tri-star consists of three narrow opening and closing range doji star candles. The second in the series closes higher than the first and the third in the series closes lower than the second. It reflects uncertainty and consequently a transition in trader sentiment from bullishness to bearishness. It should be pointed out, however, that this pattern does not have a high degree of reliability. It is still a pattern that should be monitored carefully, particularly when a stock is nearing all-time highs.
It always important to put price action in perspective. Take a look at the weekly Amazon chart. Two weeks ago shares broke through long term triangle resistance on this time frame. There has been follow-up price action this week with both these moves coming on strong volume.
This suggests that even if Amazon shares do pullback it may only constitute a retest of triangle resistance-turned-support in the 2050 area.