NEW YORK ( TheStreet) -- Amazon (AMZN) - Get Report delivered a new closing high Monday, which could be signaling the next leg up in a series of advances that the stock has been making since the beginning of the year.
The weekly chart shows the stock trading in a declining triangle for most of 2014, with moving average convergence/divergenceand the accumulation/distribution line trending flat.
This year, a series of pattern breakouts began followed by narrow horizontal channel consolidations. Moving average convergence/divergence transitioned higher, reflecting the shift in trend, and accumulation/distribution is advancing above its 21-period signal average, reflecting increased buying interest.
The current consolidation phase was affected by the recent perturbations in the market, and while there isn't a clearly definable bottom, there is a well-delineated resistance level. On Monday, the stock moved above that resistance level, which could be the start of another cycle higher.
The daily chart shows in more detail the stock price attempting to consolidate in a narrow channel in early August and that pattern being broken by the volatility later that month. It managed to climb back up to the channel top this month, and Monday's close took out horizontal resistance in the $540 area.
The Aroon indicator at the top of the chart measures the direction of trend and trend strength. A new uptrend is underway when the green "up" line crosses above the centerline and the blue "down" line crosses below it. At the bottom of the chart, the accumulation/distribution line has crossed above its signal line providing positive money flow confirmation of the recent price action.
Amazon is a buy after another close in upper candle range above resistance, with a position size that allows for a trailing percentage stop under the 50-day moving average.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.