Amazon successfully retests breakout level - Long side setup

Amazon successfully retests breakout level - Long side setup

One of the arguments that technical analysis types will often have is whether you should wait for a retracement before entering a position after a breakout. I often think you should - especially if you completely missed the breakout as I did with Amazon and thus have little choice.

The thing I would suggest that is most notable about this breakout is the very strong candle that accompanied it. I know that often this is a concern for traders because it's moving so fast but the upshot is that you can see that there is a huge amount of buyer support accompanying the price breakout - which is clearly what you want as a trader. The price also retraced back and respected the 50 day moving average volatility band which I would also view as a positive given the prevailing direction of the trend.

I would suggest that a likely difference with this setup is there has been a retracement is that a point slightly under that is likely to be where the stop-loss on the trade will be placed. There is an initial price target of almost $26.50 from the point of the breakout here - clearly though the distance between the breakout and an eventual entry point will need to be deducted from that.

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