Netflix, Inc. (NASDAQ: NFLX)

Netflix, Inc. provides Internet entertainment services. The company operates in three segments: Domestic streaming, International streaming, and Domestic DVD. It offers TV series, documentaries, and feature films across various genres and languages.

Take a look at the 1-year chart of Netflix (NASDAQ: NFLX) below with my added notations:

Over the past 12 months, NFLX has formed a large, inverse head and shoulders reversal pattern (green). I have noted the head (H) and the shoulders (s) to make the pattern more visible. The stock’s neckline resistance is at the $385 level (red). NFLX will confirm its H&S if the stock breaks through the neckline.

The Tale of the Tape: NFLX has formed an inverse head & shoulders pattern. A long trade could be entered on a break through the $385 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT