As we mentioned in previous posts Netflix was trading in a long-term sideways trading range between $465 and $575. Price is now trading very close to the lower boundary of this trading range and breaking below it will give us an important bearish signal.
Red rectangle -support
Green rectangle -resistance
Netflix initially bounced the last time price reached the support but the bounce was short lived and price is now turning back lower. The RSI is far from oversold levels. Technically short-term trend remains bearish as price is making lower lows and lower highs. Using the Ichimoku cloud indicator on a weekly basis we find some warning signals for bulls.
On a weekly basis the candlestick pattern has entered the Kumo (cloud). This has turned weekly trend from bullish to neutral. Price is trading below both the tenkan-sen (red line indicator) and the kijun-sen (yellow line indicator). As long as this is the case (price below tenkan-sen and kijun-sen), price will be vulnerable to pushing lower towards the lower cloud boundary at $435. This at the same time will mean the exit of the long-term trading range we are in. Resistance is found in the upper cloud boundary at $505-$510. Bulls need to recapture this level in order to challenge the next resistance level of $520-35.
