Netflix Inc. (NFLX) has been weak in recent sessions. The shares have made a new low down for this month Thursday and have been trading below the cresting 50-day moving average line.
Should we get cautious or defensive on NFLX? Let's subscribe to a few charts.
In the daily bar chart of NFLX, below, we can see that the shares made peaks in July and September. A close below the August lows will allow technicians to talk about a double top formation.
The On-Balance-Volume (OBV) line has been stalled since its April high but stands at the bottom end of its six month's trading range. The Moving Average Convergence Divergence (MACD) oscillator has moved below the zero line for a sell signal.
In the weekly bar chart of NFLX, below, we can see a mixed picture. The shares are still trading above the rising 40-week moving average line.
The weekly OBV line has weakened slightly since May and the MACD oscillator has rolled over to a take profits sell signal in this longer time period.
In this daily Point and Figure chart of NFLX, below, we can see a potential downside price target in the $416 area.
Bottom-line strategy: With a number of sell signals or bearish clues, traders should be more defensive or cautious on NFLX. The Point and Figure chart suggests a fall to the $416 area.
