Globaltrader24 has indicated his negative outlook for Netflix stock earlier this year and regular visitors of our blog have been able to benefit from a short position in Netflix.
Higher levels are not followed by higher highs
Netflix’s shares are very popular, especially among the younger generation. They believe in the future of the company and the unique content that is offered. The competition, however, is huge, production costs are high and the company is not making any profit. A P / E ratio of 305 would therefore seem way too overvalued. We have indicated earlier this year that there were possibilities for a short trade on Netflix.
Technically, the share shows great movements around news events such as the quarterly figures. After publication of the quarterly figures the share nosedived, after which it recovered to higher levels. The higher levels, however, are not followed by higher highs. Instead, the graph shows lower highs.
After publication of the latest quarterly figures, Netflix shares dropped to $ 84.50. Here, a double bottom was formed after which the price has risen and is now around the $ 100 resistance level.
Should the price break the resistance of $ 100, supported by a high volume, then higher rates are possible. However, this seems very unlikely to me. The price is held back by the 100-day and 200-day average. In addition, the volume is decreasing further and further.
A step back is therefore very likely. A price lower than $ 85 opens the way to even lower levels.
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