Amazon is currently showing an impulsive retracement from the upper diagonal trend line, with a clear five-wave decline from the highs. This move can ideally represent wave A of a higher-degree ABC correction within wave 4, which could eventually bring the price back toward the open/unfilled gap area around the 213 level.
After the recent projected corrective recovery in wave B, Amazon may now be entering another decline within wave C toward the 213–200 support zone to complete the larger corrective structure.
Investors should also keep an eye on the upcoming earnings report scheduled for Thursday, July 30, which could have a significant impact on the short-term price action. Earnings volatility may either accelerate the ongoing corrective move or provide a catalyst for a stronger recovery.
As discussed previously, an ending diagonal is considered a significant reversal pattern, especially when it appears during the later stages of a larger bullish trend. Once completed, it is often followed by a sharp and aggressive reversal.
Highlights:
- Wave C appears to be in progress within a deeper higher-degree ABC correction during wave 4 consolidation.
- Key support is seen around the 213 gap area, with additional support near the 200 level.
- Earnings on July 30 could become a short-term catalyst for the next major move.
- A break below 200 would increase the risk that a larger cycle top is already in place.
- Ending diagonals are often followed by strong reversals after completion.
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