Since my article from the other day covered 1/2 of the FANG trade, I had a request in the Idea Chamber for an update on the other half of the trade. My previous article covered Facebook (the F in FANG) and Alphabet (the G in FANG – only because it used to be called Google).

Today’s article will focus on Amazon (the A in FANG) and Netflix (the N in FANG). Facebook’s and Google’s chart both looked bullish. Let’s see if that trend continues while analyzing the A and N in FANG. So let’s get started with this Amazon (AMZN) & Netflix (NFLX) stock chart review!

Amazon (AMZN) – Upside Price Targets

Amazon (AMZN) represents the “A” in the FANG acronym. My previous update for Amazon was at the beginning of March 2017. I recommend reading that article first to refresh the expectations that were developed in that article for AMZN’s share price.

“3/6/2017 – Amazon (AMZN) Stock Chart Review”

Ok, now that you’re back from reading the previous Amazon (AMZN) article, its time to get an update on bullish scenarios #1 and #2. This 5 year monthly candlestick chart for AMZN with 3 different Fibonacci Extension Tools overlaid on it. The green tool is the shortest-term of the 3 tools.

Amazon (AMZN) & Netflix (NFLX) Stock Chart Review

Calculating Upside Price Targets for Amazon’s (AMZN) Share Price Using Fibonacci Extension Tools

With a long-term MACD Histogram that reflects an increase in buying momentum and decent buying volume over the last 3 months, [s2If !current_user_can(access_s2member_level1)]…………..

If you want to continue reading this article for Amazon (AMZN) and Netflix (NFLX), you must first login.

If you are not a Trendy Stock Charts member, consider joining today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)]AMZN’s share price does appear poised to continue its run to the $1,100 area. That would mean that Bullish Scenario #2 from my previous article is playing out.

While the odds for Bullish Scenario #2 did not look favorable at the time of the previous article, AMZN’s share price did exactly what was needed (as I detailed in the previous article) to keep the hopes of this more bullish scenario alive.

If Bullish Scenario #2 keeps playing out through April, I would anticipate that AMZN’s share price reaches the $940 level at some point during the month. The $940 area is also represented by the 61.8% Target Line from the green Fibonacci Extension Tool.

A trade opportunity most likely exists as AMZN’s share price reaches the $940 area. The trade would be to sell a few shares around $940ish and look to purchase those shares on a pullback around the $900 area. However as AMZN’s share price reaches the $940 area, this trade set-up should be re-analyzed before following through with it. If this is a trade that interests you, ask for an update in the Idea Chamber when AMZN’s share price reaches the $940 area or close to it.

Netflix (NFLX) – 20 Year Monthly Chart

The last company for me to cover in the FANG trade is Netflix (NFLX). Netflix is the “N” in the FANG acronym.

Netflix is a company that has not been written about much at Trendy Stock Charts as there have not been any member requests. NFLX was covered for a very brief period in the Idea Chamber before I switched web host providers, but since the switch there has been no coverage.

Since this is basically one of the first full-length looks at NFLX’s charts, let’s start off with my typical new company chart – the 20 year monthly candlestick chart. On this chart, I placed 2 Fibonacci Extension Tools to help with calculating upside price targets for its long-term Bullish Impulse wave pattern that has been under development since August 2012. I also made some notes on the chart regarding the current wave pattern. Take a look.

Amazon (AMZN) & Netflix (NFLX) Stock Chart

Analyzing a 20 Year Monthly Candlestick Chart for Netflix (NFLX) and a Probable Bullish Impulse Wave Pattern that Appears Almost Complete

A few different signs seem to be indicating that NFLX’s current uptrend could be in danger:

A bearish divergence setting on with the buying volume and the buying momentum
A new uptrend high that was made on decreasing buying volume
The 1st bout of significant selling momentum (per the MACD Histogram) seems to fit well as helping to identify Wave 4 in a Bullish Impulse wave pattern (read up Bullish Impulse wave characteristics)
Its share price has already reached the Golden Ratio for its current uptrend
- Unless the share price is going to extend and reach for the 261.8% Target Line, the Golden Ratio, or 161.8% Target Line, usually represents the near-term end of most uptrends

Since several indicators or items seem to indicate the current uptrend is close to over, entering into a long position at this level takes on some additional risk. The bearish divergence Ive noted on the above chart (decreasing buying volume, a rising share price and a MACD Histogram that reflects increasing buying volume) was the same scenario that Apple’s share price saw almost 2 years ago. Apple proceeded to top out around the $135 area before an approximate 30% pullback to the $90 price level. If NFLX’s current Bullish Impulse wave pattern is over or almost over, its pullback area based on the wave development above would be the $100 price level. That would be an approximate 33% downside risk area.

But even with the bearish items noted above, NFLX’s share price is rising and the longer-term buying momentum is still increasing. Based on a MACD Histogram that still reflects longer-term buying momentum, NFLX’s share price advance does not appear to be over quite yet. It does seem to indicate a $180 price target before entering into a longer consolidation period. If this is the case, understand that the road from the current share price to the $180 price target will not be an easy one. The possible last stages (Wave 5) of a Bullish Impulse wave pattern tend to have a lot of volatility near its final stages. Reaching the $180 price target will require patience and discipline.

However as several other indicators point out, the top of the current uptrend could be near.

Let’s look at some shorter-term charts and see what they indicate for NFLX’s share price.

NFLX – Bullish Impulse Wave Alternative

In the above 20 year monthly candlestick chart for NFLX, I illustrated that its share price appears to be in a Wave 5 of a Bullish Impulse wave pattern. This is the most likely wave pattern based on the technical analysis indicators on the chart so far.

But this chart will review an alternative outcome for its share price, one that is extremely bullish. This outcome involves a slightly different naming convention for the waves on the same monthly candlestick chart. While this scenario playing out does not seem as likely based on the above bearish signals, I do want to eliminate the possibility yet until its price action tells me to do so.

I zoomed in a little bit from the 20 year monthly candlestick chart to a 10 year monthly candlestick chart since the first 10 years of activity are not included in the current analysis. This is a multi-year uptrend that could see its share price reaching higher price targets still.

Illustration of the Most Bullish Scenario Possible for NFLX’s Share Price – Unfortunately That Doesn’t Mean It’s The Most Probable Outcome

For this scenario to continue playing out, you should see NFLX’s share price pushing through the blue 50% Target Line and possibly even up to the $180 price level before entering into a couple of month consolidation period. Upon reaching the $180 price area, it would be recommended to sell some shares and then look to repurchase those shares on a pullback to the supporting trendline back around the $150 price level.

This scenario should also see some increasing buying volume to go along with the MACD Histogram that reflects increasing buying momentum. If the blue Wave 3 is currently in process, the $150 price level should definitely provide support after a break above and then a pullback to that price level.

The minimum price target for the blue Wave 3 would be the 100% Target Line, or the $215 price level. The other calculated price target for Wave 3 would be the $295 price level. This is the area of the blue 161.8% Target Line. If either of these price targets are going to be met, AMZN should have positive earnings reports over the next several quarters. These positive earnings reports would help to propel its share price.

NFLX – Cup With Handle Breakout

I want to see a little more detailed chart activity, so I zoomed in to a 5 year weekly candlestick chart instead of a monthly chart. A weekly candlestick chart can help to provide more detail than a monthly chart. Looking at the additional detail, I see a probable Cup With Handle chart pattern that developed from the end of 2015 until October 2016.

Most breakouts tend to pullback and re-test the breakout area before continuing their advances. If the extremely bullish scenario I pointed out above does play out, it would most definitely involve a successful re-test of the Cup With Handle breakout area. This breakout area is around the $125 price level. If AMZN is truly in its very bullish blue Wave 3 that I describe above, its share price should see a rebound in sharp buying volume upon reaching the $125 breakout area.

A Cup With Handle Chart Pattern for Netflix (NFLX) On Its Weekly Candlestick Chart

NFLX has an upcoming earnings report on April 17, 2017. An earnings disappointment in any regards that sends its share price below the $125 area requires additional patience. Especially if the break occurs on heavy selling volume. That would most likely be a confirmation that the very bullish scenario can kiss its chances goodbye. Any move towards or below the $100 price level significantly decreases the chances for the extremely bullish scenario to play out.

The concerning item when looking at the breakout from the potential Cup With Handle chart pattern is that there is no significant increase in the buying volume for the breakout. I would think that a breakout for a substantial move higher would involve a heavy buying volume breakout.

NFLX – Summary

Entering a trade at these price levels for NFLX can be risky considering the possible near completion of a Bullish Impulse wave pattern. In order to help mitigate that risk, wait for a possible pullback after its next earnings report. At a minimum, wait to make any scale-in purchase until after its next earnings report on April 17.

If the earnings report causes the share price to pullback to the breakout area, consider using that as an initial scale-in entry area. That would be the first pullback to the $120 – $125 area after its next earnings report. Make sure the short-term (daily) MACD Histogram shows a decrease in selling momentum before making that initial scale-in purchase. If either actual selling volume is increasing or the MACD Histogram continues with increasing selling momentum, hold off on the initial scale-in purchase until NFLX’s share price reaches the $100 price level.

Once NFLX’s share price starts correcting, it will be extremely important to monitor the correction. Monitoring the correction will provide clues as to whether the Bullish Impulse wave pattern is over and a long correction is taking place or whether a shorter correction is likely and a very bullish scenario is going to play out.

I would personally wait to make sure that any re-test of the breakout area from the Cup With Handle pattern holds and a rebound in strong buying volume ensues. If that happens, I would then consider purchasing shares. Because any pullback that goes below the breakout area is most likely indicating that the Bullish Impulse Wave pattern is over and the longer correction is in process.

Let me know if you have any questions with the article and good luck trading!

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