Why I Am Buying Netflix: A Technical Analysis Perspective
Spotting the Reversal: The Key to the Uptrend
Netflix’s chart recently showed a classic reversal pattern at $865, where a small red candle appeared, signaling exhaustion of selling pressure. This type of candle often marks a shift in momentum, especially when it forms near a support level or after a prolonged downtrend. The presence of such a candle suggests that selling has slowed, and buyers are stepping in to regain control.
Bollinger Bands: A Strong Rebound from Support
Netflix’s price touched the lower Bollinger Band around $869, a critical support level, before bouncing back. This confirms a mean reversion trade setup where price tends to revert toward the midline (moving average) of the Bollinger Bands. Historically, when Netflix’s stock hits the lower band and prints a reversal candle, a rally often follows.
Moving Averages: Aligning for a Bullish Crossover
The short-term moving averages are starting to curl upward, indicating potential bullish momentum. A golden cross, where the short-term MA crosses above the long-term MA, would reinforce the bullish case. The stock is now trending above the 50-day moving average, a strong signal that the tide has turned in favor of buyers.
MACD: Momentum Shifting in Favor of Bulls
The MACD (Moving Average Convergence Divergence) indicator has been in bearish territory, but the histogram bars are shrinking, showing that selling momentum is fading. A crossover of the MACD line above the signal line would confirm a new uptrend, making Netflix an even stronger buy candidate.
Trendline Break: Confirmation of a New Uptrend
A downtrend line has now been broken, and Netflix is forming higher lows and higher highs, which is a textbook definition of an uptrend. The recent breakout above $900 adds further confirmation that the rally is gaining strength. If Netflix sustains this trend, the next major resistance level to watch is around $1,000.
Final Thoughts: Why Netflix Is a Buy Now
The combination of a reversal candle at $865, a bounce from Bollinger Band support, improving MACD momentum, and a trendline breakout makes Netflix an attractive buy at this level. The risk-reward ratio favors the upside, and technical signals are aligning for a strong push higher. I see Netflix moving toward $1,000 in the near term, with potential for further gains if volume supports the rally.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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