By CCN.com: Netflix stock remains firmly in the limelight – for all the wrong reasons.
NFLX shares are down nearly 30 percent from their all-time high, and the stock has plunged more than 22 percent since mid-July following a brutal earnings report.
Many armchair traders believe that Netflix stock could dive even further.
https://twitter.com/TrueBubbleHead/status/1164327669456080896
However, while it’s true the stock looks bearish, its technical picture suggests that it will likely regain its bullish momentum soon.
Netflix’s Uptrend Remains Intact as It Forms a Bullish Continuation Pattern
A closer examination of the equity’s longer timeframe reveals that Netflix is forming a symmetrical triangle pattern. This is a bullish continuation pattern suggesting that the stock is taking a pause from its uptrend.
Once this pattern is resolved, we can expect the stock to rally.
Based on this analysis, Netflix should bounce toward the $350 area for the D wave of the triangle.
That’s an outlook also shared by widely-followed pseudonymous analyst TraderStewie :
“With yesterday’s nice hammer candle close, I’m now starting to see a decent looking #FallingWedge pattern in this one again! Notice the MACD and RSI action. $330 to $340 target area.”
In addition, Wyckoff Stock Market Institute co-owner Todd Butterfield spoke to CCN.com and shared his view on Netflix. He said:
“Netflix on the three-year chart did a classic Wyckoff ending action with a Preliminary Supply (PS), Buying Climax (BC), Automatic Reaction (AR), and a Secondary Test (ST). This meant that the rally needed to pause and refresh itself, or correct the previous rally. With the oversold reading and Fibonacci support, it now has a chance to regain its footing and try another run at the $385 resistance area.”
The Wyckoff whiz supports the bullish view of consolidation and a near-term bounce. For now, it appears that the dump is over and there could be room to make a quick buck by buying the Netflix stock dip.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.
