Is Netflix about to continue its bullish climb, or are the bears preparing for a pullback?
With NFLX earnings right around the corner, we’re now approaching key technical levels that could set the stage for the next move.
Here’s a closer look at the current setup.
Netflix (NFLX): 4-hour
NFLX: 4-hour Chart by TradingView
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on NFLX earnings, be sure to do so before working out a trade and risk management plan!
From a strictly technical point of view, NFLX has been on a tear higher since August, where it bottomed out at around $588, now trading just above the $700 handle.
So the bullish momentum is still very real, and if the upcoming earnings report continues to make a bullish fundamental case for the stock, then the potential support area around the $700 handle is the area to watch if NFLX pulls back on the event.
This is where we see a confluence of technical arguments, first the potential for broken resistance there to draw in buyers, as well as the rising 100 and 200 simple moving averages raising the odds of drawing in the algo traders and TA crowd into the uptrend.
Now if this area around $700 is tested and breaks on bearish fundamental catalysts to the downside, this could draw in net bears and push the market to the next potential support area, around the $665 mark, roughly two daily ATR from current prices.
Now, if there is no pullback on earnings and the earnings report is fundamentally positive, watch out for the market break to the upside. If so, the next potential resistance area could be $750 in the short-term, a reasonable target as that is also within two daily ATR (roughly $30) from current market trade.
Whichever bias you end up planning for, don’t forget to practice proper risk management and stay on top of NFLX news!