Watch These Netflix Stock Price Levels After Streamer Issues Soft Outlook

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Timothy Smith

Thu, Jul 18, 2024, 8:25 PM 2 min read

Netflix shares lost ground in extended trading Thursday after the streaming giant’s soft outlook overshadowed second-quarter results that came in ahead of Wall Street expectations.
Technical signals, including a potential double top, bearish divergence, and a close below the 50-day moving average, point to a tiring uptrend.
During retracements, Netflix shares may find key chart support at $638, $550, $500, $440, and $365.

Netflix (NFLX) shares traded slightly lower in extended trading Thursday after the streaming giant’s soft outlook overshadowed second-quarter results that came in ahead of Wall Street expectations.

Below, we take a closer look at the Netflix chart and use technical analysis to point out key post-earnings levels to watch out for.

Chart Signals Tiring Uptrend

Netflix shares have tracked steadily higher since mid-2022, with the trend gathering strength after the 50-day moving average (MA) crossed above the 200-day MA four months later to form a bullish golden cross pattern.

Despite the streaming giant’s long-term uptrend, recent technicals on the chart indicate weakening buying appetite.

Firstly, two distinct peaks have formed throughout June and July, potentially carving out a double top, a chart pattern that signals a reversal after a security reaches a high price two consecutive times.

Secondly, as the share price made its second high, the relative strength index (RSI) made a shallower high to create a bearish divergence, suggesting waning momentum.

Finally, the stock broke down below the closely watched 50-day MA on Thursday leading into the company’s earnings report, a sign that investors could be positioning for a “sell the news” event.

Monitor These Key Retracement Levels

If Netflix shares undergo a post-earnings decline, investors should monitor five key areas on the chart that may attract buying interest.

The first level to watch sits less than 1% below Thursday’s close at $638, a location that may garner support near a series of price actions over the past five months.

A close below this region could see the shares fall to around $550, where they may find buyers near the rising 200-day MA and an established uptrend line that extends back to July 2022.

The next lower area to watch is situated at $500, where a period of consolidation prior to the January stock gap could provide support.

A further decline may see the shares revisit the $440 region, an area on that chart where buyers could seek an entry point near several prior highs in the stock between June and September last year.