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Amazon's Chart Just Flashed a Pennant Pattern—Here's What to Do
Written by Sam Quirke. Published 8/27/2025.
Key Points
- Amazon shares are up 8% this month and 40% since April as the rally continues to embed itself for the long run.
- A fresh tightening pennant pattern has recently emerged, which suggests a decisive move is coming.
- All things considered, there’s every reason to think this move will be to the upside.
Tech titan Amazon.com Inc. (NASDAQ: AMZN) closed just under $230 on Tuesday, extending an 8% gain since early August. The broader uptrend since April remains firmly intact, with shares up more than 40% during that stretch.
This week, chart-watchers are focused on a technical pattern every Amazon investor should know: the pennant.
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Here's why this setup matters—and how investors might consider positioning themselves in Amazon.
A Technical Setup Worth Watching
A pennant forms when a stock consolidates in a narrowing range after a sharp move, with lower highs and higher lows converging into a small triangle. This pattern indicates a temporary stalemate between buyers and sellers, each waiting for a decisive move.
Professional traders pay close attention to pennants because they often precede powerful breakouts. For example, Tesla Inc. (NASDAQ: TSLA) broke out of a similar formation two weeks ago and continued its rally.
Amazon has logged lower highs since late July and higher lows since early August, creating a clean pennant pattern. Shares are currently testing the upper trendline.
A breakout could come any day. However, it wouldn't be surprising if the stock remains range-bound for a few more sessions as the pattern tightens.
Strong Fundamentals Support a Rally
The key question is whether this breakout will be to the upside or downside.
On balance, the odds favor the upside. Amazon's fundamentals remain robust, and its earnings have consistently topped expectations this year. The company continues to deliver across cloud, retail, and advertising, providing multiple growth drivers.
Wall Street is also supportive. Analysts have maintained a Buy rating all year, with refreshed price targets this month as high as $300.
At Tuesday's close near $230, a move above the pennant could target roughly a 30% upside, bolstering the case for a bullish breakout.
Positioning for the Next Leg Higher
For long-term bulls, building an initial position while Amazon consolidates makes sense—especially in a strong uptrend and accommodating macro environment.
You can add to that position once the breakout is confirmed. Watch for a decisive green candle closing above the pennant's descending trendline on strong volume; that setup would signal the end of consolidation and the start of the next leg higher.
Support, Resistance, and Breakout Potential
Conversely, a decisive break below the rising lower trendline would indicate that sellers have regained control, raising the risk of a deeper pullback. Current support sits near $220, and a sustained break below this level would warrant a reevaluation of one's position.
With equities broadly in rally mode and risk-on sentiment prevailing, a downside break appears less likely. On the upside, the initial target is $235, where shares topped out in late July. Beyond that, February's high around $240 comes into play.
If those levels clear, momentum could propel Amazon into "blue-sky" territory, especially as analysts already point to $300 as a medium-term destination.
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