Discussion with A-EYE
Thanks for clarifying! I’ll analyze the Amazon (AMZN) chart
for potential bullish MACD divergence, where price makes lower lows while the
MACD makes higher lows — a possible sign of a reversal. I'll take a close look
and let you know what I find shortly.
Bullish MACD Divergence on AMZN's 2-Year Daily Chart
Understanding Bullish MACD Divergence
Bullish MACD divergence occurs when a stock’s price makes
lower lows while the MACD indicator forms higher lows, deviating from the price
action
senatormensch.com
. This divergence signals that downward momentum is
weakening – essentially, the bears are losing power – even as price continues
to fall
macroption.com
. Such a mismatch often serves as an early warning of a
potential trend change, indicating a bullish reversal may be ahead
senatormensch.com
. In practice, traders watch for these conditions as a buy
signal, since the probability of an upward turn increases when MACD divergence
appears
macroption.com
.
Price Action vs. MACD on AMZN’s 2-Year Chart
Figure: Amazon (AMZN) 2-year daily chart (approx. mid-2021
through mid-2023) with volume, RSI, and MACD indicators. The price (top panel)
is enclosed in an ascending channel (black trendlines). The MACD oscillator
(bottom panel) shows momentum trends via the MACD line (green) and signal line
(purple), with the histogram in red/green.
On this 2-year daily chart, Amazon’s stock price underwent a
significant decline from late 2021 into late 2022. The downtrend pushed the
price to a new low of around $84 per share by the end of December 2022
plus500.com
. Notably, this late-2022 low was lower than an earlier
trough in mid-2022 (which had been in the high-$90s). In other words, the stock
registered a lower low in price during Q4 2022 compared to its mid-2022 low.
However, if we examine the MACD indicator in the bottom panel, a different
story emerges: the MACD did not make a lower low at that same time. Instead,
the MACD line’s trough in late 2022 was higher than its trough during the
mid-2022 sell-off. The MACD histogram bars in December were also shallower
(less negative) than those during the prior low, reflecting reduced downward
momentum. This bullish divergence – price making a lower low while MACD makes a
higher low – is clearly visible on the chart and suggests the downtrend was
waning even as Amazon’s share price hit its lowest point.
Identifying the Bullish Divergence (Mid-2022 vs. Late-2022)
To pinpoint the divergence, we can compare two specific
periods on the chart:
First Low
(Mid-2022): In May–June 2022, AMZN’s price dipped to a significant low (just
under the $100 level). The MACD indicator at that time fell deep into negative
territory, reflecting strong bearish momentum.
Lower Low in Price
(Late-2022): By late December 2022, the stock dropped even further, breaking
below the mid-year low to close around $81–$84 at its lowest point
statmuse.com
. This was a fresh
multi-year low for the price (Amazon was down ~52% for 2022
plus500.com
). Importantly, at
this late-2022 low, the MACD oscillator behaved differently: the MACD line
bottomed at a higher value than it did in mid-2022, and the histogram showed a
smaller negative spike. In other words, momentum was not as weak as before,
even though price was lower. The MACD failed to make a new low alongside the
price – a classic bullish divergence signal
senatormensch.com
.
This divergence becomes evident when looking at the MACD’s
two troughs. The first trough (mid-2022) was lower on the MACD scale, whereas
the second trough (Dec 2022) was higher, indicating the decline’s momentum had
eased. Essentially, the MACD was “diverging” from the price trend – the
downtrend in price was not confirmed by a new low in the MACD. Technically,
this bullish MACD divergence reflected a weakening downtrend and hinted that
sellers were exhausting (the bearish drive was fading). As a result, the stage
was set for a potential bullish reversal in price.
MACD Line and Signal Line Behavior
Beyond just the MACD’s lows, it’s also useful to observe the
MACD line vs. signal line around this period. In late 2022, as the MACD formed
a higher low, you can see the MACD line begin to curl upward toward the signal
line. Shortly after the price bottomed (moving into early 2023), the MACD line
crossed above the signal line from below, confirming the shift in momentum to
the upside. This bullish crossover occurring after a divergence is a strong
confirmation of the reversal signal
fidelity.com
. Traders often view a MACD bullish crossover (MACD line
> signal line) following a divergence as validation that the trend is indeed
turning. In Amazon’s chart, the MACD crossover in early 2023 reinforced that
the late-2022 bullish divergence was translating into real positive momentum.
Is a Bullish Divergence Present on AMZN?
Yes. The AMZN 2-year daily chart exhibits a clear bullish
MACD divergence in late 2022. The price made a pronounced lower low (Dec 2022)
compared to mid-2022, while the MACD indicator made a higher low over those
same two troughs. We identified the divergence between roughly June 2022 and
December 2022 – during this interval the price fell to new lows, but the MACD’s
downward swings grew more subdued. This is precisely the bullish divergence
pattern we were looking for. The presence of this divergence signaled that the
prior downtrend was losing downward momentum and that a bullish reversal was
likely in the works
macroption.com
.
Implications for AMZN’s Price Action Going Forward
Bullish divergences often precede upward reversals, and the
one on Amazon’s chart was no exception. This technical signal suggested that
AMZN was bottoming out in late 2022 and that a trend change to the upside was
probable. Indeed, following the divergence, Amazon’s stock rebounded strongly –
in 2023 the share price rallied roughly 80% off its lows
macrotrends.net
. Such a recovery aligns with what a bullish MACD divergence
foreshadows: the downtrend gave way to a new uptrend.
Going forward, this divergence-based evidence of shifting
momentum is optimistic for AMZN’s outlook. It indicates that the worst of the
decline (in that 2-year span) was likely over and that buyers were regaining
control. In practical terms, the bullish divergence strengthens the case for a
continued recovery in price. Traders and analysts would interpret it as a sign
that momentum has swung bullish, meaning Amazon’s stock could continue to rise
or at least remain well-supported off those lows.
Key Takeaways
Bullish Divergence
Detected: The chart shows a bullish MACD divergence – price made a lower low in
late 2022 while the MACD formed a higher low.
Exact Period:
Observed between mid-2022 and Dec 2022, where the stock’s fall to ~$84
plus500.com
in Q4 2022 was not
matched by a new low in the MACD indicator.
MACD Momentum
Shift: The MACD line’s higher trough and subsequent crossover above the signal
line signaled waning bearish momentum and a momentum shift to the upside
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.
Bullish Reversal
Signal: This divergence suggested a bullish reversal was likely
senatormensch.com
. In the ensuing
months, AMZN’s price did reverse and climb significantly, confirming the
signal.
Outlook: The
presence of bullish divergence is a positive technical sign for future price
action – it implies the downtrend has exhausted and upside potential has
increased. While not a guarantee, it bodes well for a continued uptrend,
barring any new negative catalysts.
Overall, the Amazon 2-year daily chart provides a textbook
example of bullish MACD divergence. The price’s lower low paired with the
MACD’s higher low in late 2022 was a strong clue that the bears were weakening
and a trend reversal was imminent. This phenomenon gave an early signal that
Amazon’s fortunes were set to improve, which was subsequently borne out by the
stock’s rally. Traders viewing this chart would take the bullish divergence as
an encouraging sign that AMZN’s downtrend had bottomed and that the stock was
positioned for a bullish turnaround going forward.
