Amazon.com got crushed when the bubble burst, losing over 90% of its value. But things started to change in late 2001. The company finally delivered good news and the stock rallied about 50% off its October low, reaching just under $10. It wasn’t a huge ramp for the former giant, but accumulation suggested the stock was nearing a significant bottom.
Notice the big move on Nov. 14, 2001. It drove Amazon above its 50-day moving average, right into a test of the last high. While volume showed significant investor interest, swing traders remained cautious because the stock could be developing a broader basing pattern, instead of a breakout.
Also notice the lines drawn across the four-month highs and lows. They take on the appearance of a partially developed symmetrical triangle pattern. A stock needs to rally quickly out of a trading range like this one, or price can easily fall back to the lower trendline at 7.