Source: TradingView.com
-
Netflix shares are in focus this week as the streaming giant gets set to release its quarterly results on Thursday.
-
After running into selling pressure near the top trendline of an ascending channel, the stock has continued to move lower, breaking down below the pattern’s lower trendline late last week.
-
Investors should watch key lower levels on the Netflix chart around $1,200, $1,110 and $1,065, while also monitoring an important overhead area near $1,340.
Netflix (NFLX) shares are in focus this week as the streaming giant gets set to post its quarterly results after markets close on Thursday.
Given the company no longer reports its subscriber numbers, investors will be monitoring if recent subscription price increases and expanding advertising sales have continued to boost revenue growth. Investors will also keep a close eye on the streamer’s full-year outlook, watching for signs that consumers could be pulling back on nonessential spending amid economic uncertainty.
Netflix shares have risen 40% since the start of the year and nearly doubled over the past 12 months, boosted in part by the company growing its advertising revenue and expanding its footprint into live event content. The stock was up slightly at around $1,250 in recent premarket trading.
Below, we take a closer look at Netflix’s chart and apply technical analysis to identify key price levels that investors will likely be watching.
After running into selling pressure near the top trendline of an ascending channel, Netflix shares have continued to move lower, breaking down below the pattern’s lower trendline late last week.
While trading volume remains average, the stock’s recent move has coincided with the relative strength index slipping below its neutral threshold, signaling weakening price momentum.
Let’s identify three key levels to watch on Netflix’s chart if the shares continue to trend lower and also locate an important overhead area worth monitoring if the stock resumes its longer-term uptrend.
The first lower level to eye sits around $1,200. This area on the chart could provide support near a period of sideways drift in late May, which also closely aligns with a minor retracement to the ascending channel’s lower trendline in early June.
A decisive close below this level could see the shares fall to $1,110. Investors may seek buying opportunities in this location near two minor troughs that formed toward the start of the ascending channel in the first half of May. Interestingly, this area also roughly matches a projected downside target that takes the stock’s move lower from late February to early March and overlays it from last month’s high, providing clues as to how price action may play out in coming weeks.
Story continues
Selling below this level opens the door for a retest of lower support around $1,065. The shares would likely encounter strong support in this region near the prominent February swing high.
A resumption of the longer-term uptrend could see Netflix shares climb to the $1,340 area. Investors who have bought at lower prices may decide to lock in profits at this level around the notable late-June peak, which also doubles as the stock’s all-time high.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.
Read the original article on Investopedia