A member has submitted a chart request for $AMZN. The first thing we can obviously note is the Wyckoffian nature of the pattern over the last 18 months or so. I won’t bother to offer a count for this structure as it’s virtually impossible to get it just right. But, there are some important things we can discuss.
- A Wyckoff structure such as this is necessarily either accumulation (or re-accumulation in this case), or distribution
- Despite what one might initially think looking at it today, we cannot quite yet conclude that it is distribution (it probably is, but we need a little more time and price to be sure)
- If this is distribution, where I have the green “A” is called a “sign of weakness,” and the green “B” is a point of supply (any further failed rallies will be the “last points of supply”)
- It is notable that the point of supply came at the midline of the range we’ve been in
- Falling below the range a second time (we did at green A, and we’re doing it again now) is decidedly not a good sign
- A typical Elliott wave structure we would expect to see falling from the November high is (at the very least) a zig-zag, with the two legs being (at least) equal in length.
- If this continues to fall, that provides us with a target of $2,222 (noted on the chart)
- However, we must also note that re-accumulations often end with what it called a “spring.” That’s a terrible drop at the end of the consolidation that shakes out all weak hands prior to a major markup. If this sees strength, then we may simply be in that process now.
Takeaways:
- So long as the midline of the old range is resistance above us, we should probably expect a move to green C
- If we see a huge high volume daily bar come in, beware of the possibility of a spring here, instead of a “sign of weakness”
- Until/unless we see that, this chart remains decidedly bearish for the time being
- I am keeping an eye on this one on the Other Counts page, and will be monitoring this there for a while
