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In the Summer of 2011, the Power of the Pattern reflected that Gold was facing key obstacles, which was its 261% Fibonacci extension level at the top of its 10-year rising channel at (1). I shared that this resistance could be a tough nut for Gold to get past and investors should “at a minimum- protect long holdings” at that time (see Gold hits Fib target here)
High flying Amazon finds itself facing a similar situation as Gold did back in 2011, as it is nearing a key Fibonacci extension level and a long term resistance line at (2) in the above chart. It’s obvious that traditional valuation measures don’t matter to investors in Amazon, as the PE ratio currently stands at lofty 3,795.
I understood why most long Gold owners didn’t believe that Fibonacci and resistance could become an obstacle for Gold back in August of 2011 and most felt there were no reasons to do anything with Gold back then. I also understand that long investors in Amazon will find it hard to believe that Fib and resistance could impact this high flyer at this time.
Game plan at (2) if you own Amazon? At a minimum…. have a stop in place to protect the nice gains this stock has made over the past 90 days (up over 20%)!
What Amazon does here is important to the GAGA indicator! (see GAGA indicator)