Technical Update - Netflix. Catching a falling knife?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: Well, the knife has already fallen, but it is not unlikely to fall further. Bottom fishing carries high risk and after such a massive sell-off Netflix has experienced high volatility should be expected
Daily chart showing Divergence on RSI i.e. the RSI value after yesterday’s sell off is higher than the RSI from 26th January low. Divergence is usually a sign of a trend is weakening. However, continued selling pressure will push the RSI lower meaning RSI is not currently indicating down trend is about to be exhausted. Netflix is likely to be depressed for quite some time.
Weekly chart shows Netflix is currently trading below the support area from December 2018. If the week closed below $231.23 expect further decline. Next support at around $195.
However, if on the other hand Bottom Fishers manage to lift the beaten down stock to close the week above $231.23 we could see a rebound to around 256.
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