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.
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.
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.
