Amazon Traders Should Watch This Level

Ed Ponsi

There was a flood of earnings results after Thursday's closing bell. Apple (AAPL), Facebook (FB), and Alphabet (GOOGL) all reported figures that were above analysts' estimates. 

Perhaps the most impressive result belonged to Amazon (AMZN). The online retail giant reported $88.9 billion in second quarter revenue, beating analysts' estimates by nearly 10%. Amazon also raised its revenue guidance for the third quarter to between $87 billion and $93 billion. 

Yesterday,I discussed Amazon with TheStreet's Jacob Sonenshine (click here for video).

Third-party seller services jumped by 53%, and subscription services increased by 30%. 

The only notable weak spot was Amazon Web Services, or AWS, which was expected to generate $11 billion. AWS came up slightly short of estimates, bringing in $10.8 billion. 

What are the key levels for Amazon traders to watch? Let's go to the chart to find out. 

Amazon. Chart by TradeStation

Amazon is once again challenging its all-time closing high of $3200. The stock has climbed above that price several times, only to be met with selling pressure (arrows). 

If Amazon can close significantly above $3200, expect an acceleration to the upside as shorts are forced to cover their positions. A break above that level would also negate a nascent double top pattern that has formed over the past month (shaded yellow).

Amazon's first major support level comes in at $2888 (black dotted line). A break below that level would lead to a decline to $2630 (red dotted line). 

On a day that saw numerous strong reports, Amazon stood out. It was a better quarter than anyone could have reasonable anticipated. 

Habits are being formed during this unique time in our history, and some of those habits may outlive the pandemic. For many, Amazon has gone from an occasional indulgence to an everyday staple. 

Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.