On Monday, technician Corey Rosenbloom, of AfraidToTrade.com, takes a technical look at this on-demand Internet streaming media provider stock, points out a clear price level to watch for clues to the future action, and how traders can possibly use this level to their advantage.
After a price surge and gap higher, Netflix (NFLX) shares are retracing in an ongoing uptrend.
For traders, there’s a clear price level to watch for clues to the future action and opportunities.
Let’s pinpoint this level and update our price targets for Netflix (NFLX):
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We’re seeing the 30-min Intraday Chart above with two key Fibonacci Retracement Grids drawn for you.
The first grid begins with the $92.30 per share swing low from July while the second grid is the bottom of the gap.
Both grids are drawn to the $117.00 level, which was the gap and run spike high on July 16.
Let’s first focus on the tighter 38.2% level of the gap, it is $110.00 per share exactly.
After multiple days of support, price broke under this level last week and traded down where we are now at the $108.00 per share loose confluence.
Note the 50% or halfway retracement of the gap; it’s also the 38.2% retracement of the intraday swing.
For now, our focus as traders should be on this $108.00 dual Fibonacci confluence.
We’ll be neutral/bullish above $108.00 and bullish for a breakout and continuation swing (potential) above $110.
However, look very closely at the $105.00 per share level.
It’s also a dual Fibonacci retracement confluence as drawn, it’s the 61.8% retracement of the gap, which overlaps the 50% retracement of the larger swing.
In other words, if price (sellers) breaks under the $108.00 level Monday, it’s likely to fall all the way to the $105.00 per share level, which would be the next potential bounce (buy) target.
And to plan further into the future, if sellers break price under $105.00, then the next stop on the downswing (target) would be the $102.00 level.
There’s something else important about $105.00 per share…
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The rising 20-day EMA (exponential moving average) is moving rapidly toward $105.00 per share and currently trades just above $104.10.
In other words, if buyers do not step up here at $108.00, then their next chance to enter this bullishly trending stock—and support-bounce it higher—would be the $105.00 triple confluence.
Either way you see it, our attention Monday should be on $108.00 for a bounce…and if sellers win the short-term victory here, price would be expected to fall lower toward the $105.00 confluence.
If so, short-sellers have a quick, narrow window to play a $3.00 fall…while buyers could build their next trade off $105.00.
Use these levels to your advantage as you plan and trade Netflix (NFLX).
By Corey Rosenbloom, CMT, Trader and Blogger, AfraidToTrade.com
