Ever since July when it broke above the $3,000 level, the Amazon share price did not let go of it. With only a couple of days ahead of the Q3 2020 earnings, Amazon consolidates around the same level. It forms a possible continuation pattern from a technical perspective and waits for the next trigger to move even higher.
Two main events may cause the Amazon share price to end the horizontal consolidation. On the one hand, the Q3 2020 earnings that will reveal how the recent Prime Day sales went. On the other hand, the US elections next week will trigger sharp moves in the stock market, and Amazon cannot decouple from the general market sentiment.
The company decided to webcast its Q3 2020 earnings on October 29th, at 02:30 PM PT. Analysts expect another strong performance in the third quarter, after Amazon easily beat earnings in the previous quarter.
More precisely, the expectations are that Amazon will report $7.29 EPS, much higher than EPS $4.23 earned in the same period in 2019. Plenty of reasons contributed to the increase in expectations, especially a shift in consumer behavior generated by the coronavirus pandemic.
The horizontal consolidation on Amazon share price leaves room for further appreciation in the stock price. Investors should focus on a break of the upper edge of the triangle at $3,450-$3,500. Such a break should trigger more interest in the measured move of the triangle. Typically, technical traders measure the longest segment in the triangular pattern and project it from the upper edge of the triangle. This way, they find out the minimum distance the price must travel to confirm the pattern. In this case, it is $4,200.
However, long-term investors that consider the move prior to the $3,000 level in July may view the triangular consolidation as part of a pennant formation. With that in mind, the price target grows exponentially.
