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Technical Analysis of NFLX

Technical Analysis of NFLX 2024-07-18

Overview

The recent technical analysis of Netflix Inc. (NFLX) reveals a complex interplay of indicators that suggest potential price movements in the coming days. The data from the last five trading days indicates a bearish trend, characterized by declining prices and weakening momentum. This analysis will delve into the trend, momentum, volatility, and volume indicators to provide a comprehensive outlook on NFLX's potential price movements.

Trend Indicators

  1. Moving Averages (MA): The 5-day moving average (MA) has decreased from 669.896 on July 12 to 650.174 on July 18. This consistent decline indicates a bearish trend. The simple moving average (SMA) and exponential moving average (EMA) also reflect a downward trajectory, with the SMA(10) at 664.340 and EMA(20) at 662.494, both lower than the previous days.

  2. MACD: The MACD line has shown a significant decline from 6.616 on July 12 to 0.030 on July 18, indicating a weakening bullish momentum. The MACD histogram has also turned negative, suggesting that the bearish momentum is gaining strength.

Key Observation: The trend indicators collectively point towards a bearish outlook for NFLX, with the potential for further declines in the short term.

Momentum Indicators

  1. Relative Strength Index (RSI): The RSI has dropped from 41.12 on July 12 to 40.01 on July 18, remaining below the neutral level of 50. This indicates that the stock is approaching oversold territory, which could lead to a potential rebound if buying interest emerges.

  2. Stochastic Oscillator: The stochastic %K and %D values are both low, with %K at 14.62 and %D at 17.68 on July 18. This suggests that the stock is in oversold conditions, which could lead to a short-term bounce if buyers step in.

  3. Williams %R: The Williams %R is at -93.35, indicating that the stock is oversold. This could signal a potential reversal if buying pressure increases.

Key Observation: While the momentum indicators suggest that NFLX is oversold, the overall trend remains bearish. A short-term bounce is possible, but it may not lead to a sustained recovery without significant buying interest.

Volatility Indicators

  1. Bollinger Bands: The price is currently trading near the lower Bollinger Band (BBL), which is at 639.51. This proximity to the lower band suggests that the stock may be oversold and could experience a bounce back towards the middle band (BBM) at 650.17.

  2. Bollinger Band Width: The narrowing of the bands indicates a potential decrease in volatility, which often precedes a price breakout. However, given the current bearish trend, any breakout may be to the downside unless a significant catalyst occurs.

Key Observation: The volatility indicators suggest that while a bounce is possible, the prevailing trend remains bearish, and any upward movement may be limited.

Volume Indicators

  1. On-Balance Volume (OBV): The OBV has shown a significant decline, moving from -11,933,573 on July 12 to -23,003,556 on July 18. This indicates that selling pressure has been dominant, further confirming the bearish sentiment.

  2. Chaikin Money Flow (CMF): The CMF is negative at -0.05568, indicating that the outflow of money is greater than the inflow, which is consistent with the bearish trend.

Key Observation: The volume indicators reinforce the bearish outlook, as the selling pressure is evident and has been increasing over the past few days.

Conclusion

Based on the comprehensive analysis of the trend, momentum, volatility, and volume indicators, the outlook for NFLX in the coming days appears to be bearish. The consistent decline in moving averages, negative MACD, and low RSI suggest that the stock is in a downward trend, with potential for a short-term bounce due to oversold conditions. However, without a significant increase in buying interest, any upward movement may be limited.

In summary, investors should be cautious and consider the prevailing bearish sentiment. A potential short-term bounce could occur, but the overall trend suggests that further declines are likely unless a catalyst emerges to shift market sentiment. Monitoring key support levels and volume trends will be crucial in assessing the stock's next moves.

NFLX