Watch These Amazon Price Levels as Stock Jumps After Cloud Growth Drives Earnings Beat

Shares of Amazon ( AMZN ) rose 6% in extended trading Thursday after the company beat Wall Street’s third-quarter earnings estimates, helped by growth in its cloud business and healthy e-commerce sales.

Amazon Web Services (AWS) revenue increased 19% during the three-month period, representing the fastest growth in the segment in seven quarters, the company said. Meanwhile, online store revenue rose 7% from a year earlier, as the tech giant said it expects a strong holiday quarter amid improved shipping times and a greater selection of low-cost items.

Before Thursday’s after-hours jump, Amazon shares were up about 23% in 2024, slightly outpacing the S&P 500’s returns over the same period.

Below, we analyze the technical aspects on Amazon’s chart and identify important post-earnings price levels that are worth watching.

Symmetrical triangle breakout

Since hitting a record high in early July, Amazon shares have traded within a symmetrical triangle, a chart pattern that indicates price consolidation before a potential breakout, usually in the direction of a prevailing trend.

In fact, the stock is poised for an upward breakout following the company’s better-than-expected quarterly report.

Let’s take a look at the key overhead level and several chart-based price targets on the Amazon chart, also noting an important support area during profit-taking periods.

Key general price levels to watch

The first level to watch is around $200, an area that could come into play on Friday as shares may face general resistance near the stock’s all-time high (ATH) and the psychological full figure.

Target price measurement principle

To predict an upside target price above ATH, we can use a technical tool called the Scaling Principle. We do this by calculating the distance between the two trend lines of the symmetrical triangle near the beginning of the pattern and adding this amount to the breakout point. In this case, we add $50 to $192, which predicts a target of $242.

Bars pattern price target

Investors can speculate on a long-term upside price target by applying a bars pattern, a technique that uses past trends on a chart to predict future trend movements.

This works by taking Amazon’s directional movement from October of last year to April of this year and overlaying the pattern from its recent low, which forecasts a target of around $273. We chose this move because it started from an earnings-driven gap following the company’s equivalent quarter results last year.

An important support area for surveillance

During periods of profit taking, investors should keep an eye on the $192 area. This area could attract buying interest near the stock’s initial breakout point, which also corresponds closely with two prominent peaks formed on the chart in April and May.

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As of the date of writing this article, the author does not own any of the securities mentioned above.