As the chart shows, Amazon (AMZN) shares fell to around $222 yesterday, despite trading above $255 at the start of the month.
The price drop is the result of several factors, including:
→ A rating downgrade from Rothschild & Co. Redburn (to “Neutral”). Analysts doubt that Amazon’s massive investments in artificial intelligence will pay off as quickly as its earlier spending on cloud technologies once did.
→ Pressure from the Federal Trade Commission (FTC). A court hearing on accusations that Amazon engaged in anti-competitive practices and overcharged US households (by more than $1bn) has been officially scheduled for February 2027.
Reviewing the chart from 3 November (when the price climbed above $250 following a strong earnings report), we:
→ used the fluctuations in AMZN’s share price to outline an ascending channel (shown in blue);
→ suggested that the initial reaction to the report might have been overly optimistic and pointed to a potential corrective move.
However, the subsequent decline of more than 13% from the November peak appears too deep to be considered a mere correction – the price is now below where it stood before the report was released. It is reasonable to assume that the surge in AMZN above the psychological $250 level on strong news was used to lock in profits from large long positions, and that market sentiment has since shifted dramatically.
Nevertheless, in the short term, AMZN traders may look for a rebound from the lower boundary of the channel. In the longer run, a bearish breakout from the current channel should not be ruled out – especially if news flow around AI takes a gloomier turn. Today, all eyes are on Nvidia’s (NVDA) earnings report.
