How to trade Netflix (NFLX) stock: key indicators, techniques, and FX brokers
Netflix Inc. (NFLX), a leading player in the streaming industry, has become one of the most popular stocks among both retail and institutional investors. With its volatile price movements and active trading volume, NFLX offers a range of opportunities for traders looking to capitalize on its trends. In this guide, we’ll break down the essential tools and strategies you need to analyze Netflix stock effectively. From technical indicators like Bollinger Bands and Moving Averages to charting techniques and expert trading strategies, this article will equip you with practical insights to make informed trading decisions.
A detailed Netflix (NFLX) stock chart analysis
The real chart of Netflix (NFLX) stock shown here is sourced from Investing.com. This analysis is meant purely as an educational guide for beginners on how to analyze stock charts and should not be interpreted as financial advice or a trading recommendation.
Time period, and indicators of Netflix (NFLX) stock chart
This chart displays weekly data for NFLX over the past year, which gives a medium-to-long-term view of the stock’s trend and price action.
Several indicators are shown on this chart:
1. Bollinger Bands (BB, 20, 2):
- Upper Band (770.35 in blue), Middle Band (moving average of 20 periods, 720.35 in purple), and Lower Band (605.16 in blue).
- Bollinger Bands are commonly used to assess volatility. Wider bands indicate higher volatility, while narrower bands suggest a period of consolidation.
- Currently, NFLX is trading near the upper band, which often indicates a bullish momentum, but it may also suggest that the stock is overbought and could see a short-term pullback.
2. Moving Average (MA, 9 periods):
- This moving average line (720.15, shown in blue) smooths out price fluctuations and provides a trend-following signal.
- NFLX is trading above this 9-period MA, a bullish sign, as prices above the moving average indicate an uptrend.
→More about how to use Moving Averages in CFD trading.
3. Relative Strength Index (RSI, 14 periods):
- The RSI value is 66.74 (purple line), nearing the overbought zone (typically above 70).
- An RSI around 70 suggests that a stock is approaching overbought conditions and may be due for a pullback, although strong uptrends can remain in overbought territory for extended periods.
Volume, trend, momentum, and volatility of Netflix (NFLX) stock chart
- Volume: Recent weekly volume levels are around 15.33 million shares, with some red and green bars indicating the volume of selling and buying, respectively.
Rising volume in the direction of the trend (in this case, bullish) can confirm the strength of the movement. However, a divergence between volume and price might suggest weakening momentum. - Trend: The NFLX stock shows a strong upward trend, as evidenced by the consistent price action above both the Bollinger Bands’ middle line and the 9-period moving average.
- Momentum: Momentum indicators like the RSI show a positive upward force but are nearing potential overbought territory. This suggests that while bullish momentum is present, caution is needed.
- Volatility: With the Bollinger Bands widening and the price near the upper band, the volatility is moderately high. This may lead to larger price swings, and investors should watch for possible corrections.
Price prediction and trading plan of Netflix (NFLX) stock
- Prediction: Given the current trend, it’s likely that NFLX could continue upward as long as it stays above the 9-period MA and the middle Bollinger Band. However, since the RSI is close to the overbought zone, there might be a short-term pullback before any continuation.
Trading plan:
- If bullish: Consider entering if the price retraces toward the middle Bollinger Band or the 9-period MA as support around $720. Monitor for a potential breakout above the upper band if volume supports it.
→More details regarding bulls and bears in the Forex market.
- If cautious: Set stop-losses slightly below the 9-period moving average to manage risk.
- If looking for a pullback: Watch for RSI to dip below 70, or for a retest of lower Bollinger Band support.
As a beginner, it’s important to remember that indicators do not guarantee price movement, and they should be used in combination with other analysis tools and news events related to Netflix’s business. This guide is for educational purposes only and illustrates how traders might interpret trend and momentum indicators.
Continue reading:
Mastering Netflix (NFLX) stock: indicators, strategies & Top FX brokers
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