Post-Earnings Stock Chart Analysis for Netflix (NFLX)

This article is a post-earnings stock chart analysis for Netflix (NFLX). NFLX reported earnings a couple weeks back on July 16, 2018. It pulled back after earnings. In a July 22, 2018 article for FANG stocks I mentioned that the $338 support level was a key area to watch.

Let’s review a couple of charts to look at the $338 support level and the price action around it.

NFLX – $338.82 Price Level Breached

Let’s start with a short-term 1 year daily candlestick chart. A daily candlestick chart can help to see the details of a larger trend that may be developing.

In my July 22 article for NFLX, I stated it was important for NFLX’s share price to remain above the $338.82 price level during its pullback. Since that article, NFLX share price breached the $338.82 price level reaching a low of $328 during its pullback so far. While I did not specifically mention it in the previous article, the $338.82 was an Elliott wave monitoring target. From an Elliott wave perspective, this breach identifies either one more all-time high before a longer consolidation period or the beginning of a longer consolidation period. I think it identifies the first of the two. Kind of like Facebook when it first pulled back on news of its data scandal.

The lower gray shaded box is the pullback area I identified as probable in the July 22 article. The $325 – $330 price range is the top end of the support area while the $295 – $300 price range is the bottom of the support area. So far NFLX’s share price bounced off the top of the support area I identified.

As NFLX’s share price attempts to rebound from the $325 – $330 support area, the Falling Window candlestick pattern around the $385 price level stands in the way. The amount of selling volume associated with the Falling Candlestick pattern is very significant. This amount of selling volume suggests that the initial attempt to close the Falling Window will fail and its share price will pull back again.

In the unlikely event that NFLX’s share price can clear the $385 resistance, it then has resistance from the previous high to deal with. A rebound to the previous high can still produce a 20%+ gain if shares are purchased at these levels. But the road back to a previous high is likely to endure more volatility than in the past.

In addition to breaking below the $338.82 Elliott Wave mark, the selling momentum from the MACD Histogram shows greater selling momentum than the previous pullback. This is one technical indicator suggesting that it may be time for a longer consolidation period. That longer consolidation period could be starting or ready to start soon.

NFLX – Fibonacci Retracement Tool

The Fibonacci Extension Tool’s 161.8% Target Line provided for one area to monitor for support during the current pullback. Now let’s place a Fibonacci Retracement Tool on the same 1 year daily candlestick chart and see what price levels the 38.2%, 50% & 61.8% Retracement Lines calculate at[s2If !current_user_can(access_s2member_level1)]…….

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I review support and resistance areas for Netflix’s share price as well as some tips on how to trade the current price action. Not only that, I discuss what the short-term price action has on the longer-term trend. This update calculates some key technical levels!

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In a strong uptrend, which NFLX has been in, the 38.2% Retracement Line should provide support. If NFLX’s share price ends up finding support at either the 50% or 61.8% Retracement Line before attempting a rebound, that would be further confirmation of a longer consolidation period at hand.

The $367 price level is important during any attempted rebound. If NFLX’s share price can break above this during its attempted rebound, a continued move towards the previous all-time high becomes more probable. It would be advisable to start trimming some shares once NFLX’s share price reaches its previous all-time high price area. That is a general trading strategy that seems like it applies to NFLX and any attempted rebound.

NFLX – 5 Year Monthly Chart

Let’s see how the recent pullback and price action has affected NFLX’s longer-term uptrend. For this I will switch to a 5 year monthly candlestick chart.

The trendlines on this chart represent longer-term support and resistance areas that have developed over the last 2 years time. The overhead red trendline represents the lower end of the resistance area. The $423 all-time high is the top of the resistance area.

The lower green supporting trendline resides around the $269 price level. This would definitely represent a buying opportunity for the longer-term if NFLX’s share price pulled back to this level.

The MACD Histogram identifies longer-term buying momentum that is slowing down in July and so far in August. But even with the longer-term buying momentum slowing, there should still be enough momentum for one more all-time high.

If a new all-time high is made while buying momentum is still decreasing and or near a zero reading, that is a sell indicator on the longer-term trend.

If a new all-time high is made and the MACD Histogram reflects increasing buying momentum again, that is a signal to continue to hold shares and stay long for the longer-term.

My guess is that a new all-time high is made and buying momentum will be decreasing. If that is the case, trimming some shares and locking in some gains at or above the all-time high is advisable.

NFLX – Point & Figure Chart Price Objectives

Let’s wrap up this post-earnings stock chart analysis for Netflix (NFLX) with a review of its Point & Figure price objectives. At the time of this article, the price objectives are listed. The links will take you to a current P&F Chart which may or may not reflect the same price targets based on subsequent price action.

High/Low P&F Chart – $269 Bearish Price Objective

Closing P&F Chart – $253 Bearish Price Objective

The price targets from the Point & Figure charts seem to confirm the idea of a longer consolidation period. Reaching either of the bearish price targets means NFLX pullback is not yet over. It would also mean that NFLX is going to break slightly below my gray shaded box I placed on the first chart above.

Breaking below the gray shaded box would be confirmation of a longer consolidation period. If that were to happen, any rebound after the break below the gray shaded box should then be sold into.

Post-Earnings Stock Chart Analysis for Netflix (NFLX) – Summary

This post-earnings stock chart analysis for Netflix (NFLX) has revealed that short-term, NFLX’s share price has its work cut-out for it. The P&F Charts suggest continued weakness for NFLX’s share price. The longer-term chart suggests at least one more uptrend and new all-time high.

That doesn’t mean that both can’t happen. I wonder if NFLX sees too much resistance at the Falling Window candlestick pattern area and then pulls back again to re-test its recent bottom. If the recent $328 bottom fails to hold, a trip towards the $269 price level would be the max pain level for the current downtrend IMO. The High/Low P&F Chart calculates to the max pain level too.

But the amount of buying momentum on the longer-term monthly chart still seems too high for NFLX’s share price not to make another all-time high. What do I mean by too high? I mean that it has a reading that is too high above a zero reading. Even though longer-term buying momentum is decreasing, it should still be high enough for one more all-time high.

Do you want to take that trip to new highs? If so, consider using scale-in purchases at current price levels, the $300 price level and the $269 price level. Consider using a weighting on the scale-in purchases.

The weighting would look something like this:

• a 20% purchase of shares at current price levels
• a 25% share purchase at the $300 price level
• a 50% purchase of shares to finish off your investment at the $269 price level

These percentages should work regardless of the amount of your investment. Using this sort of weighting system typically allows shares to be sold at an overall profit in total based on the average cost. A gain can still be made using the weighting system even if NFLX’s share price doesn’t reach a new all-time high during any rebound. This flexibility allows you to enter into the trade now with a back-up plan if the attempted rebound fails quickly.

Or, you could just wait until NFLX shows more constructive price action before making that first initial purchase. After all, its share price hasn’t even been rebounding for more than 4 days. Wait until NFLX breaks above the $367 mark, once it does, purchase NFLX’s next pullback. You will then be in the trade.

Now, if you are currently long or have been long NFLX, you could use the same strategy described above to repurchase any sold shares. And the outlook is the same for an purchased or repurchased shares. NFLX should push up towards its previous all-time high. If I am reading the chart correctly, Elliott wave evidence suggests at least one more all-time high before entering into a longer consolidation period. Remember that there is also a lot more volatility in trying to make that one last new high. Getting there sometimes feels like a consolidation.

After a new all-time high though, I think it will be time to take both shorter and longer-term gains. As always, we will re-analyze the charts to make sure, but that is how it looks right now….

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