Amazon Stock Chart Teaches This Important Lesson – Amazon (AMZN)

The table of Amazon.com, Inc. (NASDAQ:AMZN) teaches an important lesson about the markets. Some price levels are more important than others. And the $3,530 one is clearly big for AMZN.

It was resistance in April, support in July, and now it’s resistance again. Levels can swing from resistance to support and from support to resistance due to investor remorse.

Investors who sold AMZN at $3,530 in April regret their decision to do so after it traded higher. Many of these remorseful sellers decide to buy back their shares. But they will only do so if they can get them at the same price at which they sold them.

As a result, they place their buy orders at $3,530. This large concentration of orders forms the support like here.

After AMZN fell below this level, many investors who bought it regret their decision. A number of remorseful buyers decide to sell.

But they don’t want to take a loss, so they place their sell orders at their buy price. This large concentration of sell orders forms resistance like here.

Understanding that some levels are more important than others is a basic tenet of successful trading.

To learn more about reading charts, join the new Benzina Trading School.

Karen J. Nelson