NFLX breaks below 20-day moving average for the first time since March 25th
Netflix Inc. (NFLX) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 5th day in a row, NFLX finished the week -5.48% lower at 429.32 after losing $6.93 (-1.59%) today on low volume, strongly underperforming the Nasdaq 100 (0.38%) ahead of tomorrow's Memorial Day market holiday. Closing below Thursday's low at 430.25, the market confirmed its breakout through the previous session low after trading up to $3.07 below it intraday.
Daily Candlestick Chart (NFLX as at May 22, 2020):
Friday's trading range has been $11.91 (2.73%), that's slightly below the last trading month's daily average range of $13.86. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for NFLX.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 427.18 earlier during the day, the stock bounced off the key technical support level at 429.00 (S1). The failure to close below the support could increase that levels significance as support going forward. The share closed below the 20-day moving average at 432.75 for the first time since March 25th. When this moving average was crossed below the last time on March 25th, NFLX actually gained 6.02% on the following trading day.
Although Netflix is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
As prices are trading close to May's low at 411.73, downside momentum could speed up should NFLX mark new lows for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 20" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Netflix. Out of 131 times, NFLX closed higher 55.73% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 61.07% with an average market move of 2.42%.
With three out of the other four FAANG Stocks closing higher today, the ones that stand out on the positive side are FB gaining 1.52% and AAPL closing 0.64% higher. On the flipside the worst performer has been AMZN closing -0.4% lower. Read more