Key Takeaways
- Netflix shares could be on watchlists Monday after the streaming giant experienced technical glitches as a record 60 million households tuned into its Friday night broadcast of a highly anticipated fight between Jake Paul and Mike Tyson
- The relative strength index turned downward on Friday, signaling slowing bullish price momentum, potentially opening the door for near-term profit taking.
- A bars pattern, which takes the stock’s trending period from January to April and repositions it from the breakout of an ascending triangle last month, forecasts an upside target of around $870.
- Investors should watch major support levels on Netflix’s chart around $770, $725, and $690.
Netflix (NFLX) shares could be on watchlists Monday after the streaming giant experienced technical glitches as a record 60 million households tuned into its Friday night broadcast of a highly anticipated fight between YouTube influencer-turned boxer Jake Paul and boxing legend Mike Tyson.
Many viewers reported experiencing buffering issues, streaming glitches, and lower-resolution video, hampering their ability to watch the fight. The technical disruptions may prompt concerns about the company’s readiness to stream highly promoted live events as its ramps up its real-time sports offerings.
Since the start of the year, Netflix shares have surged around 69% through Friday’s close, far outpacing the performance of its streaming rivals including Disney (DIS) and Comcast (CMCSA), which have returned 27% and -2%, respectively, over the same period.
Below, we take a closer look at the techncials on Netflix’s chart and identify important price levels investors may be looking out for.
Slowing Bullish Price Momentum
Since breaking out above the top trendline of an ascending triangle pattern following the company’s better-than-expected quarterly results last month, Netflix shares have continued to trend sharply higher.
However, the relative strength index (RSI) turned downward on Friday, indicating slowing bullish price momentum, potentially opening the door for near-term profit taking.
Looking ahead, let’s look at chart-based upside price target and identify several major support levels on Netflix’s chart that may attract interest during retracements.
Chart-Based Upside Price Target
Investors can forecast an upside target by applying a bars pattern, a technique that uses a prior trending move on the chart to speculate how a future directional move may play out.
In this case, we take the stock’s trending period from January to April and reposition it from last month’s ascending triangle breakout. This forecasts a potential move up to around $870, which sits about 6% above Friday’s closing price.
We selected this prior trending move as it also commenced from an earnings-driven breakout following an earlier ascending triangle on the chart.
Major Support Levels to Watch
The first key level to watch sits around $770, a location on the chart where the shares may find support from a trendline connecting a period of consolidation following the initial breakout from the ascending triangle.
A close below this level could see the shares decline to $725. This area on the chart may attract buying interest on a retest of the ascending triangle’s top trendline, a region that also currently lies just below the upward sloping 50-day moving average.
Further selling could lead to a revisit of lower support around $690, an area where investors may seek entry points near a horizontal line linking a range of comparable trading levels on the chart between June and October.
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As of the date this article was written, the author does not own any of the above securities.
