, Inc. (NASDAQ: AMZN), Inc. engages in the retail sale of consumer products and subscriptions in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS) segments.

Take a look at the 1-year chart of Amazon (NASDAQ: AMZN) below with my added notations:

1-year chart of Amazon (NASDAQ: AMZN)

AMZN appears to have formed a down-channel over the past several weeks. A channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance.

The Tale of the Tape: AMZN has formed a chart pattern known as a channel, in this case, a down channel. A long trade could be entered on a pullback down to the channel support, or on a break through the channel resistance. Short opportunities would be on rallies up to channel resistance or on a break of channel support.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT