In previous posts we have warned traders about the warning signals the NFLX stock price has provided us with bearish divergence signals and an upward sloping wedge pattern. Price last week broke below the lower wedge pattern providing us with a bearish signal.
Black line- upper wedge boundary
After touching the upper wedge boundary for the third time, price got rejected and has now broken below the blue support trend line. A back test of the broken trend line should be expected as a natural reaction to the break down. As we mentioned before, even when technically trend was bullish, we prefer to be neutral as the chances for a major reversal in NFLX are high. Next key support level is at $490. Bears need to break below this level in order to confirm their control of the trend.
