Focusing on Key Support and an Open Air Pocket for Netflix NFLX

Mar 25, 2014: 11:59 AM CST

A quick glance at the Daily Chart of Netflix (NFLX) shows a critical support-test happening today.  Another failure here from the buyers opens Netflix shares to descend into a clear “Open Air Pocket.”

Let’s set the stage for a “support bounce” or entry into a pocket (with more downside targets) for Netflix shares:

NFLX Netflix Open Air Pocket

Before we discuss the current situation, let’s study the triple-swing negative momentum (and volume) divergence that preceded the recent sell-off swing for price.

I highlighted the recent March peak that occurred on a lengthy negative divergence into the $450 “round number” price level.

Price cleanly broke the potential support of the rising 20 day EMA (notice the multiple support bounces during the uptrend) to extend what would become a 10-day in a row decline phase ahead of the two large sell days we saw recently.

At the moment, we’re watching shares form a potential “support bounce” play off the key $380 per share zone which is the upper rim of the “Pocket.”

I drew the blue Open Air Pocket representing no major/obvious price support levels until we see the lower edge into the confluence of the rising 200 day SMA and prior swing low region near $330 from January.

Netflix shares become an aggressive sell candidate (bear bias) under the $380 level where they rest currently.

Here’s another view of possible downside targets and current levels to watch:

Netflix NFLX Daily Fibonacci

We see the extended rally and the divergence into $350 per share.  The sell-swing down from $350 led not just to a test of the $400 “round number” target, but also where we are now – on the edge of the cliff of yet another breakdown swing.

From the April low, the 38.2% Fibonacci Retracement intersects $343 which gives another possible downside target to be achieved.  Incorporate this level into the 200 day SMA and prior price low confluence near $330.

The lengthy divergence preceded the sell-swing and now we focus our attention on the current levels and potential downside targets should the current support level also fail.

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Corey Rosenbloom, CMT
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1 Comment

One Response to “Focusing on Key Support and an Open Air Pocket for Netflix NFLX”

  1. James Jennings Says:

    WPRT is not going anywhere but in the tank. Look at its financial statements. Technical analysis is not everything.