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Just For You Why Amazon's 'Overbought' Signal Isn't a Red FlagAuthored by Sam Quirke. Posted: 1/13/2026. 
Article Highlights - Amazon's RSI has pushed into overbought territory, a signal that likely reflects strength rather than exhaustion.
- The move comes after weeks of higher lows, with earnings now looming as a major near-term catalyst.
- Combined with firm analyst conviction, the overbought signal may confirm that bulls are firmly back in control.
Shares of tech giant Amazon.com Inc (NASDAQ: AMZN) surged more than 10% last week, starting what could be a decisive run toward November's all-time high. The move hasn't appeared out of nowhere. For months, the stock has been carving out a steady series of higher lows, quietly building pressure beneath the surface even while the significant gains hadn't yet arrived. As the rally has gathered fresh pace, one of the stock's technical indicators has attracted attention. Over the past week, Amazon's relative strength index (RSI) has climbed to 70, a level traditionally associated with overbought conditions. In many stocks, that would be enough to raise caution. With Amazon, though, the context suggests this is more likely a buy signal than a red flag. Why Overbought Doesn't Always Mean Overdone The RSI is a momentum indicator that measures the speed and magnitude of recent price moves. Readings above 70 are typically described as overbought, suggesting a stock may be due for a pause or pullback. Conversely, a reading of 30 or below indicates a stock is oversold and may be due for a bounce. In a sustained uptrend, a stock's RSI can remain elevated for long periods as buyers step in on minor dips. Rather than signaling the start of a top, an RSI that is just crossing into overbought territory can confirm that momentum has decisively shifted in favor of the bulls. Amazon's current setup looks much closer to that scenario. Notably, this rally hasn't been driven by a single catalyst or headline. It follows weeks of steady accumulation and improving sentiment — factors that tend to support further near-term gains. Earnings Timing Could Favor Amazon Bulls Another reason the overbought signal may be viewed positively is its timing. Amazon's next earnings report is scheduled for the end of January. Historically, betting against Amazon into earnings at this time has been risky, and it appears the bears are aware of that. The company has a strong track record of performing well into and out of earnings, and with the RSI indicating the bulls have the upper hand, the risk-reward profile looks increasingly attractive. It's also worth noting that Amazon finished last year essentially flat despite consistently delivering solid results. That means this rally isn't occurring after a period of excessive optimism; instead, it looks like the market is finally catching up to a stock that's been showing strength. Bullish Analyst Sentiment Confirms Amazon’s Momentum Shift Amazon's momentum is being reinforced by strong analyst support, with multiple firms maintaining bullish stances and price targets north of $300. With the stock trading below $250, the path of least resistance still appears higher. This matters for how the latest RSI signal should be interpreted. Overbought readings are more concerning when fundamentals are deteriorating or when sentiment is euphoric. Neither is true here. Analysts remain broadly bullish, expectations are high for another earnings beat, and the narrative around Amazon's growth drivers remains intact. Rather than signaling froth, an RSI around 70 suggests the market is committing capital in size. In that light, it looks less like a reason to step aside and more like confirmation that a new phase of the rally may be starting. How Investors Might Approach Amazon Here That doesn't mean the next phase of the rally will be perfectly linear. Short-term pauses or modest pullbacks are always possible, especially after sharp weekly gains. But the broader takeaway is that, having failed to break the stock's multi-month uptrend, the bears appear to have lost significant footing. If the stock can consolidate — or even add to — its recent gains in the coming sessions, it will be difficult to bet against it heading into earnings in two weeks.
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