Netflix Inc (NASDAQ: NFLX) is one of those companies that performed very well during the coronavirus pandemic, with subscribers growing rapidly during the lockdown periods. However, this has changed after the restrictions were lifted, as consumers are now spending less time at home, due to outdoors entertainment becoming available again. Today, after the US closing bell, the firm reports its earnings results for Q1 2021, with revenue growth expected to decelerate to its slowest in at least 15 quarters. However, investors may also pay attention to details about Netflix’s video game strategy, as the firm said it is preparing for a major expansion into the gaming world.
From a technical perspective, the stock remains stuck between two diagonal lines, an upside one taken from the low of September 18th, and a downside one drawn from the peak of January 20th, when the stock hit its record of 593.24. With that in mind, and also taking into account that we are a few hours away from the earnings results, we prefer to take the sidelines for now.
If the earnings surprise to the upside, we could see the stock surging back near the aforementioned downside line, the break of which, combined with a break above the key resistance of 563, could allow more advances and another test at the all-time high of 593.24. If investors decider to take the stock into the uncharted territory, we may see them targeting the 650.00 area.
Shifting attention to our short-term oscillators, we see that the RSI drifted south after hitting its 70 line, while the MACD, although positive, has topped and fallen below its trigger line. Both indicators detect slowing upside speed and suggest that some further retreat may be looming, but still in between the aforementioned diagonal lines.
In order to start examining whether the outlook has turned negative, we would like to see a dip below 480.00. This would also confirm the dip below the upside line drawn from the low of September 18th, and could aim for the 460.00 zone, and then the 432 barrier, marked by the lows of September 18th and June 29th, 2020, respectively. If the bulls are not willing to jump into the action from near one of those areas, then we may see declines towards the 397.00 hurdle, defined as a support by the low of May 27th, 2020, the break of which could see scope for extensions towards the low of April 9th, 2020, at 363.00.
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