A Buy Setup in Amazon

Multiple Squeezes, Multiple Targets

When the market is at new highs, it’s hard to find tickers to enter where you have an edge. While trading momentum at highs is fun, it will always be much more risky than buying the dip on something that is already pulled back.

On the daily chart, I use critical moving averages, including the 8 EMA, 21 EMA, 34 EMA, 50 SMA, 100 SMA, and 200 SMA. The 8 EMA is the closest and most aggressive pullback zone, and each progressive level notifies a deeper pullback. (EMA = exponential moving average, and SMA = simple moving average.)

Generally, a pullback to the 21 EMA at a minimum will give you a decent edge, but for swing setups, I like even deeper pullbacks to the 34 EMA and the 50 SMA. It’s rare to see pullbacks to the 200 SMA in a strong bull market, but it can be a discounted buy point when it occurs.

The Case for Amazon

The combination of squeeze plus a pullback with an edge is going to make for the best entry with an edge when looking for swing trading setups. This also goes best in the context of a trend. It’s these factors that I start with, and then I combine options analysis in addition to analyzing the time frame.

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