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AMZN Trade Setup & Entry

AMZN (Amazon.com) offers an objective short entry on this breakdown below this 30-minute bearish rising wedge pattern. Suggested stop above 723.00 although those targeting T3 or even a possible longer-term swing trade could use wider stops, allowing for a backtest of the wedge.

AMZN 30-minute May 13th

AMZN 30-minute May 13th

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May 13, 2016 10:53am|Categories: Completed Trades - Short|Tags: |7 Comments

7 Comments

  1. joefriday May 13, 2016 11:52 am at 11:52 am

    Nice Randy..been watching AMZN too… This is my chart showing MACD and RSI divergences on the 4hr chart… even more telling imho… although no TL break yet.. http://s32.postimg.org/cpzblvft1/amzn.png

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    • rsotc May 13, 2016 11:59 am at 11:59 am

      It appears that the difference in our TLs is likely due to log scaling on my charts & linear/arithmetic scaling on yours, correct?

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      • joefriday May 13, 2016 12:40 pm at 12:40 pm

        Correct…and FWIW, my TL would break at approx. 706..

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  2. Teeps01 May 13, 2016 12:49 pm at 12:49 pm

    Question for you Randy

    If charts used are arithmetic like JF has, are you more likely to get whipsawed on a perceived TL break, initiating a short, only for price to then appear to move back into the wedge & likely trigger a stop.

    I think IG uses arithmetic charts with no log option to select & am wondering if this is one reason why I’m being put into difficult positions when TLs seem to be violated.

    Thanks

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    • rsotc May 13, 2016 1:23 pm at 1:23 pm

      I’m not sure but what I will say is that if the majority of traders are watching & acting on a TL that is drawn on a chart using log scaling, then yes, you would be more likely to get what appear to be whipsaw signals using a chart with linear scaling.

      I’m a big proponent of using log scaling on all but the shortest intraday time frames. Essentially, the larger the range of prices on the chart you are viewing, the more pronounced the different will be when using log vs. linear scaling.

      Using AMZN, for example, the stock went from 475 to almost 718 in just 3 months, which is the period covered by that the lower TL on the wedge I posted (off the Feb lows). That’s a big move & by using a log scaling, you get a more accurate technical picture of the stock as the price moves (candlesticks) at the Feb lows are exactly in proportion to the price swings (candlesticks) that are taking place now that the stock is trading over 50% above where it was just two months ago. Linear charts don’t adjust for such a large price swing & render an inaccurate technical picture of AMZN over the last two months. If you want to see a more drastic comparison, pull a 10-year+ chart of AMZN & compare it using both log & linear scaling, you will see two completely different looking charts with completely different trendlines.

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  3. joefriday May 13, 2016 9:25 pm at 9:25 pm

    Good stuff..I learn something new everyday here…. I may have to try log scale charts.. Thanks..

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  4. snp June 29, 2016 11:01 am at 11:01 am

    log scale is the bomb, only way to go

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