AMZN great example of sellers exhausting

BATS:AMZN   Amazon.com, Inc

AMZN great example of relative down volume:

This is from a chart I had saved back on March 8th. I didn't publish it, but I felt it was worth publishing now anyway just to show how I had analyzed the moves down and how investors were absorbing shares being sold and how it shows up in the chart. What a technical trader needs to look for is the amount of volume in successive moves in the same direction. You can see in the chart that each decline in price occurred on less and less volume and that suggested that the sellers were done selling their shares, which of course sets up for the next big advance.

The way I am placing trendlines is different from other textbooks, but these are some discoveries that I have put to use after nearly 30 years of charting stocks. Even though there are only 4 price data points each day, coupling that with the 5th variable of volume and then the 6th variable of relative action to the market, there are still many ways to analyze whether price action indicates accumulation or distribution. There is no right or wrong way, but only ways which yield variable-risk, variable-reward and variable-probability of success. At the end of the day, it helps to believe what the chart pattern is telling you so that you can take action to enter the market and more importantly to take action to EXIT the market at a loss.

Here's wishing you all success and finding the next chart similar to this one!

Cheers, Tim 2:10PM EST Mar 27, 2012
Subscribe to my indicator package KEY HIDDEN LEVELS $10/mo or $100/year and join me in the trading room KEY HIDDEN LEVELS here at TradingView.com


Dear Tradingview - I'm interested in figuring out how to ask someone why or what they disagreed with in this chart... maybe we can find a way to set up a communication to help get more info about the disagreement. I'm fine with disagreement, but since this is pointing out the "past" there really isn't much to disagree with... perhaps the way I draw trendlines from different points.... Thanks as always for Tradingview. It is a great platform and I am very thankful for all of your hard work in providing this great service to us. Tim
admin timwest
Tim, thank you very much for the feedback. We are working on the functionality which will make it more convenient.
Comment removed
olegm2 olegm2
hmm, yea great tip.

I put my stock on the watch list to see if the same pattern emerges.

timwest olegm2
olegm, look for volume in the declines and see if it reduces on each successive wave.
timwest olegm2
https://www.tradingview.com/e/m0ROo3xa/ Just a note - see if you can overlay FXI with AA going back to 2009. Alcoa seems to be connected to the Chinese market.
Nice job Tim !
timwest Algokid
Thanks Algo kid. I sure hope this helps us find more of these type of trades. I just sold my AMZN shares at 209.46 that I bought at 181 in late Feb & early March - so I'm looking to find a replacement long position.
timwest timwest
I am re-entering AMZN today after this downgrade - It is pulling back and I believe buyers are lurking just under current levels based on previous price-action. I like to use short term bad news to enter in strongly-uptrending stocks. So this downgrade provides a decent re-entry since exiting 5% higher last week.