We gave a positive spin on the charts of Netflix (NFLX) in our review on September 13, writing that "NFLX has been correcting this month on declining volume, and I consider that bullish. The weekly candle pattern is potentially negative, but the major trend is up and we do not have a classic top pattern. Net-net I want to give the benefit of doubt to the bulls -- stay long NFLX, but raise stops to $550."
Let's stream the charts once again.
In this daily bar chart of NFLX, below, we can see that prices only pulled back to $570 so traders should have been able to stay long with a $550 stop. The slopes of the 50-day and 200-day averages are still positive.
The On-Balance-Volume (OBV) line has climbed to a new high to confirm the price gains as traders are more aggressive buyers of NFLX.
The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a new outright buy signal.
In this weekly Japanese candlestick chart of NFLX, below, we can see that prices have broken out on the upside from a 14 month consolidation pattern or trading range. Notice the lower shadows around $575? I don't see that volume expanded on the breakout but the OBV line has turned upwards. Got to take what the market gives you. The MACD oscillator is pointed up and bullish.
In this daily Point and Figure chart of NFLX, below, we can see an upside price target of $692. The trade at $620 refreshed the uptrend.
In this weekly Point and Figure chart of NFLX, below, we can see a slightly higher price target of $700.
Bottom line strategy: Traders who are long can raise stops to $569 from $550. The $690-$700 area is our next upside price target.
