Amazon’s Key Levels: A GEX-Driven Path to Trading SuccessTechnical Analysis for AMZN (Dec. 10, 2024)
Price Action:
* Opening Movement: AMZN opened with bullish momentum, continuing its trend from the previous session. It tested the $230 resistance level, coinciding with the Highest Positive GEX and psychological significance.
* Mid-Day: The price started consolidating between $225 (support) and $230 (resistance), showing indecision among buyers and sellers.
* Closing Trend: Towards the end of the session, AMZN slightly pulled back, hovering near the $226 zone but still maintaining its uptrend structure above key moving averages and trendlines.
Key Indicators Observed:
1. GEX Indicator:
* $230 Level: Marked as the highest positive gamma resistance, AMZN struggled to break above this level due to the options market hedging activity. Gamma levels acted as a natural resistance barrier.
* $225 Support: This level, corresponding to the 2nd Call Wall, provided strong support during intraday pullbacks, confirming its significance.
* Put Support at $217.5: Below $220, this zone indicates a potential area of buying interest if the price dips further.
2. Trend Lines:
* AMZN respected an upward-sloping trendline throughout the session, demonstrating a bullish sentiment.
* The price held above this trendline, reinforcing it as intraday support.
3. MACD:
* The MACD is currently bearish, with a downward crossover. The histogram is trending negative, signaling reduced bullish momentum and a potential pullback in the short term.
4. Volume:
* A spike in volume was observed during the test of the $230 resistance, indicating significant activity in this region. However, volume decreased during the consolidation phase, hinting at market indecision.
GEX Indicator Insights:
The Gamma Exposure (GEX) indicator highlighted key levels that directly influenced AMZN’s price action:
* Resistance at $230: This level acted as a ceiling, supported by high positive gamma levels, which increased market makers' hedging activity, limiting further upward movement.
* Support at $225: GEX provided a reliable support zone, giving traders confidence to enter long positions during pullbacks.
* Value of GEX in Trading:
* GEX helps traders identify where significant resistance or support levels lie based on options market activity.
* It enhances confidence by revealing hidden forces that shape price movements, offering clarity in volatile conditions.
* Without GEX: Traders may miss understanding why prices consolidate or reverse at specific levels, reducing their ability to predict market movements.
Trading Plan for Tomorrow:
Scalping Strategy:
1. Entry Points:
* Long Above $230: Look for a breakout above $230 with strong volume. Target $235.
* Short Below $225: Enter short if the price breaks below $225, targeting $220 or $217.5.
2. Stop-Loss: Use tight stops of $1 above or below entry points.
Swing Trading:
1. Bullish Scenario:
* If AMZN holds above $225, expect a retest of $230. A breakout could target $235 and $240 in the coming sessions.
2. Bearish Scenario:
* A break below $225 could lead to a decline towards $220 and potentially $217.5.
Disclaimer:
This analysis is for informational purposes only and should not be construed as financial advice. Always perform your due diligence before making any trading decisions.
