Key Takeaways
- Netflix shares are up to start the new week, as the streaming giant prepares to release its earnings report after Thursday’s closing.
- Last week, there was a surge of buying near the lower trendline in a descending channel. This could set the stage for an earnings-driven rally.
- Investors should monitor vital support levels on Netflix's chart around $821 and $765, while also watching important resistance levels near $1,000 and $1,065.
Netflix (NFLX), the streaming giant, is set to release its earnings report after Thursday’s closing.
Wall Street’s average rating for the stock is “buy”. This is despite concerns that a tariff-induced slump could slow advertising and cause consumers to reduce discretionary spending on services such as streaming subscriptions. Analysts from JPMorgan recently noted that the company was well positioned to weather a macro-environment of uncertainty given its strong customer base.
Investors will be looking for price increases to offset the higher production costs of the streamer’s expanding content slate, which includes live sports and event programming. Netflix shares rose 3% to $946 in the most recent trading. This brings the stock’s gain for the year so far to 6%.
Below, we examine Netflix’s chart in greater detail and use technical analysis to identify crucial price levels that are worth keeping an eye on ahead of the streaming giants’ quarterly results.
Descending Channel Takes Shape
Netflix shares have been trending lower since mid-February when they reached a record high. They are now in a downward channel.
The stock has seen a recent increase in buying interest around the lower trendline. This could be a precursor to a continuation rally after earnings.
Last week’s rebound coincided with a strong increase in the relative strength indicator (RSI), indicating accelerating momentum. However, on Thursday and Friday the indicator dipped a little as the price consolidated from Wednesday’s rally.
We will identify key support and resistance levels that investors should be monitoring in order to monitor possible price swings.
Monitor vital support levels
If you sell at current levels, the intraday low of last week around $821 could be retested. This area of the chart could also provide support near both the lower trendline of the descending channel and the stock’s trough in January.
A breakdown here could trigger the fall to the next vital support level at $765. Investors could accumulate shares near the upper limit of a consolidation phase that formed in the chart following the breakaway gap last October.
Watch out for Important Resistance Levels
This week, further buying could fuel a rally towards the $1,000 level. This area will likely attract significant attention around the psychological round number, and a range corresponding trading activity in the chart going back to mid-October.
A more bullish move could see Netflix shares rise to $1065. This is a place on the chart that investors may be looking for opportunities to take profits near the stock’s all-time high.
This area is also in the same neighborhood of a projected bars patterns target that takes the upward trend that immediately preceded descending channel, and repositions from last week’s lowest point. The analysis speculates on how a possible continuation move in stock may play out.
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