Amazon shares are breaking out. Here's how much higher it could go

Amazon hit yet another all-time high Tuesday, and TradingAnalysis.com founder Todd Gordon says the charts are hinting the e-commerce giant could soon reach a new milestone.

"You can see that [Amazon has made a very nice uptrend in 2017]," the technical analyst said Tuesday on CNBC's "Trading Nation." "And if we were to draw a parallel channel, you can see that [Amazon] is moving towards the top end of the parallel channel just south of $1,200 ... It looks like we have room towards $1,160 to $1,180 here in the next one to two months"

That's another rally of as much as 5 percent for the stock, which is already up 50 percent this year.

What's more, Gordon points out that in the last few months, a cup and handle formation has formed in charts of Amazon, which he sees as a bullish signal that the stock will move even higher.

To take advantage of a rally in Amazon, Gordon wants to buy the December 8 weekly 1,135-strike call and pair that with the sale of the December 8 weekly 1,140-strike call for about $2.10, or $210 per options spread. This means that if Amazon were to close above $1,140 on Dec. 8 expiration, then Gordon could make a maximum profit of $290.

But if Amazon were to close below $1,135, then Gordon would lose the $210 he paid to make the trade. As a precaution, he establishes a point where he would get out of the trade.

"If the premium paid gets cut to about $1.05, let's go ahead and cut the trade," he said. "The trade is probably not working."

Amazon was trading around $1,122 on Tuesday.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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