Stock Of The Day: Is This The New Range For Amazon?

Trading in Amazon.com, Inc. (NASDAQ:AMZN) is quiet on Wednesday. The shares have been consolidating since last week's selloff, driven by a disappointing earnings report.

The chart of Amazon illustrates two market principles that successful traders understand. This is why it is the Stock of the Day.

After entering free fall last week, the shares found support at the $200 level. This wasn't a coincidence.

As you can see on the chart, there was support for the stock around the $200 level in May 2025. There tends to be support at prices that have been support in the past.

This happens when some of the people who sold around $200 regretted doing so when the price rallied. Some of them decided to buy their shares back if they could eventually do so at their selling price.

So when the stock fell back to this level, these regretful sellers placed buy orders. The large concentration of these orders created support.

After the shares rebounded, they hit resistance around the $211 level. This wasn't a coincidence either. There tends to be resistance at prices that have previously been support.

This happens because some of the people who bought shares around $211 decided they made a mistake when the support broke. A number of them decided to exit their positions if they could ever do so at breakeven.

As a result, when the shares rebounded to $211, a large number of remorseful buyers placed sell orders. The large concentration of the sell orders formed resistance at the same price that had been support.

Successful traders understand how important psychology is in a market. They understand that sellers' remorse can create support at former support levels. They also understand that buyers' remorse can create resistance at former support levels.

This understanding and knowledge allow them to decide where there are low-risk entry and exit points for their positions.

Photo: Shutterstock