Netflix Inc. (NASDAQ: NFLX) traded higher on Wednesday and Thursday, after it hit support at 466 on Tuesday. However, the price remains below the prior uptrend line taken from the low of March 17th, as well as below a newly established downside resistance line taken from the high of July 13th. Thus, we would consider the near-term outlook to be cautiously negative.
The stock may trade slightly higher, but if the investors are unable to push it above the abovementioned downside line, we may see another round of selling and another test near 466. If there are no barriers at that zone this time around, a break lower may extend the slide towards the 433 barrier, marked by the low of June 29th, or the 413 hurdle, defined as a support by the low of June 12th.
Looking at our short-term momentum studies, we see that the RSI rebounded from near its 30 line, but still remains below 50, while the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators suggest slowing downside momentum and support the notion for some further recovery before the next leg south.
On the upside, we would like to see a break back above 511, the high of August 6th, before we start considering the bullish case again. Such a move would confirm a forthcoming higher high and may also take the price above the upside line taken from the low of March 17th. We could then see advances towards the high of July 16th, at 535, the break of which could pave the way towards the peak of July 13th, at 575.
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