Amazon is another S&P 500 heavyweight that shows a consolidation pattern. The online retailer reached an all-time high in early September. Subsequently, a 3-wave pullback initiated a correction. Price action consolidated sideways during the past three months. The pattern is typical for the consolidation of a larger trend.

Most often, price action eventually resolves in the direction of the paramount trend. The larger trend is up in the case of Amazon. A breakout with a subsequent retest of the resistance (upper solid black trend line) is the setup that many traders are acting upon. They take that as a signal to buy the stock.