Amazon’s short-term Elliott Wave read says the advance from the 7 April 2025 low ended with wave ((1)) at $287.22, forming a diagonal, and the stock has since moved into a larger-degree wave ((2)) pullback. Wave ((2)) is described as a zigzag correction: from the ((1)) top, wave 1 ended at $274.63 before wave 2 recovered to $282.79. The sell-off then continued with wave 3 dropping to $258.34, while wave 4 rebounded to $262.90, and wave 5 fell to $255.02 to complete higher-degree wave (A).
Wave (B) is now under way, aiming to correct the cycle from the 3 August 2026 high and projected to develop in either three or seven swings before the broader downtrend continues. Within that zigzag, wave A reached $267.56 and wave B ended at $257.12, leaving wave C pointing higher in the near term. The $287.22 pivot remains the key reference point for the structure.
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Short-Term Bounce Faces Key Resistance
We are currently tracking a short-term corrective bounce in Amazon (AMZN) as part of a larger-degree wave ((2)) pullback. Although the stock is experiencing a temporary move higher in wave C of (B), we expect this rally to face heavy resistance and eventually fail below the $287.22 pivot. Derivative traders should prepare to exploit this temporary strength by positioning for the next major leg down.
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Macro Risks and Trading Strategy
This cautious outlook aligns with historical market trends, where September has historically been the worst-performing month of the year for major tech equities, averaging a 1.2% decline since 1928. Furthermore, while Amazon’s AWS cloud division continues to command a dominant 31% global market share, broader macroeconomic headwinds are expected to cap near-term valuation expansion. We believe the current upward swing offers an ideal window to build short positions rather than chasing the rally.
For short-term traders, there is a brief opportunity to ride the wave C bounce toward the $270 to $275 zone. However, our primary strategy is to wait for signs of exhaustion in this target range to buy October or November put options. As long as the critical $287.22 ceiling remains intact, the risk-to-reward ratio heavily favors preparing for a broader downside extension.
