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Fan Yang

Netflix (NFLX) - Anticipating a Pullback vs. Q1 Rally

Shares of Netflix was in a bearish correction mode for the 2nd half of 2018, but recovered quite nicely in the first quarter of 2019. In April however, price action finally broke the pattern of higher highs - an early signal that $NFLX could be heading for a bearish correction.

NFLX Daily Chart

(click to enlarge)

Resistance:
- As we can see on the daily chart, the rally since late December has brought NFLX up to a previous support/resistance pivot area around $380.
- Price tagged this resistance, but the market was unable to push price higher.
- Then, price made a lower high in April.
- Also notice the bearish divergence that has been developing between price and the RSI.
- All these point to a possible pullback against the Q1 bull run.
Support:
- In the short-term, the $350 area might provide support. A break below this low would lead to a lower low following the recent lower high.
- This scenario (a break below $350), then opens up the $320.20 support pivot, which was the low of the channel  pattern spotted on the daily chart.
- This is a critical support, so I would limit the bearish outlook to $320 for now. 

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