Amazon stock nears $190 as wedge pattern signals volatile breakout risk
CEO Andy Jassy warned about the potential impact of slower consumer spending
As of May 5, Amazon (NASDAQ: AMZN) stock is trading at $189.98, reflecting a marginal decline of 0.13% from the previous close.
The stock has been moving within a rising wedge formation on the daily chart, a technical setup that often precedes a significant breakout or breakdown. This pattern is defined by converging trendlines, with the price forming higher highs and higher lows, but within a narrowing channel. Typically, such formations are viewed as bearish reversal patterns when they occur after an extended uptrend, as they often signal waning momentum.
The 50-day moving average currently hovers just above the $190 mark, acting as a dynamic resistance level, while the 200-day moving average is providing support around $163. These moving averages form critical indicators of near-term price behavior. A sustained move above the 50-day average would bolster bullish sentiment, while a breach below the 200-day level could prompt heavier selling.
AMZN stock price dynamics (March 2025 - May 2025). Source: TradingView.
The Relative Strength Index (RSI) recently moved back above 55, suggesting increasing buying pressure, but it remains well below overbought territory. Volume trends have been relatively muted during the formation of the wedge, which aligns with the classic pattern of weakening participation ahead of a breakout. If volume spikes significantly in either direction, it could serve as confirmation of the breakout or breakdown.
Market context: cautious outlook despite strong fundamentals
Amazon reported strong quarterly earnings recently, with robust growth in its AWS cloud segment and a notable recovery in advertising revenue. However, management issued a softer-than-expected outlook, citing macroeconomic uncertainties. CEO Andy Jassy warned about the potential impact of slower consumer spending and broader economic softness, contributing to a cautious tone despite upbeat results.
These concerns come amid renewed fears of trade tensions and higher tariffs, particularly in the context of the ongoing U.S.-China dialogue. Rising costs, logistical challenges, and tighter regulatory scrutiny on large tech firms have also added to investor caution. As a result, Amazon shares have declined approximately 13% year-to-date and are down 22% from their February peak, reflecting a cooling of investor enthusiasm after a strong 2024 rally.
Despite these headwinds, the broader analyst community remains bullish. According to Visible Alpha, all 26 analysts covering the stock rate it a “buy,” underscoring strong conviction in Amazon’s long-term value proposition. The average price target stands at $233.64, implying over 20% upside from current levels. UBS, while slightly trimming its target to $249, still expects a strong recovery as macro conditions stabilize and growth in AWS and advertising segments accelerates.
Breakout and breakdown scenarios
From a technical perspective, Amazon’s near-term trajectory will hinge on its behavior around the $199 and $170 levels. A breakout above $199, especially if accompanied by higher-than-average volume, could pave the way for a rally toward $216, a level that corresponds with key resistance seen in early 2024. Such a move would invalidate the bearish implications of the rising wedge and signal renewed upward momentum.
Conversely, a decisive break below $170 could trigger a decline toward $152, which served as a key support zone in late 2023. This would confirm the wedge breakdown and could mark the beginning of a deeper correction, especially if broader market sentiment deteriorates.
Amazon Web Services generated $29.3 billion in revenue, growing 17% year-over-year but falling just short of analyst expectations. Meanwhile, advertising services outperformed, highlighting Amazon's strengthening position in digital advertising.
