NFLX Daily Chart shows Positive Divergence Setting Up
NFLX has almost bottomed, a move down to 63, or if that fails, 58-63, will take care of it, then NFLX should be okay from there on out.
NFLX Daily Chart:
The green lines show that positive divergence is in place now for the RSI, MACD and stochastics, with oversold conditions and a falling wedge for price, a perfect group of signals for a bounce up and recovery. But, not so fast. The money flow indicator is not happy with the low price level as yet; there is always one of them in the crowd, folks. The red circles show that money flow is actually printing lower lows, thus, price is going to have to come back down again to test 63 or lower. The weekly chart hints at the same action. The low from a day ago was 63-ish; the lows and S/R from February 2010 is in the 60-63 zone as well.
Note the dark blue circle that may be a potential island reversal forming where price now gaps up from 70 to 75-ish in a heartbeat. Also note the larger light blue potential island reversal that would take price from 90 to 110 in a heartbeat. But, as the red circles forecast, do not get too excited about all that bullishness just yet. First thing is first.
Price needs to come back down to test the low at 62.90. If the 62.80 level is held, then the worst is over and the sustainable upside party can begin. When this price low occurs, watch the money flow indicator and you will see that the money flow will then be positively diverged signaling the all clear for a bullish bounce and recovery. The other outcome is for price to collapse lower, to explore levels from early 2010. This scenario would take price as low as 58, so the target for a long entry would then be from the 58-60 area.
Projection is for price to fall to set up a long play from 62.80, or from the 58-60 range. This matching or lower low in price at 58-63 should place a base for NFLX and even serve as a head for a potential inverted head and shoulders that will form as the weeks and months move along. NFLX has almost bottomed, one final move to 63, or, 58-63 is all that is needed.
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