Netflix formed the possible head-and-shoulders pattern between April 26 and May 26, with the left shoulder created over the first seven trading days within the time period, the head over the subsequent eight days and the right shoulder was printed over the eight days that followed. On Tuesday, Netflix retraced slightly lower to back test the neckline of the pattern and held above it.
Netflix’s relative strength index (RSI) has been making a series of higher highs and higher lows, which indicates momentum into the stock is increasing. Netflix’s RSI is currently measuring in at about 43%, which indicates the stock has room to move in either direction before entering into oversold or overbought territory but the indicator is suggesting more upside. Netflix is trading in a confirmed uptrend, with the most recent higher high printed on Tuesday at the high-of-day and the most recent higher low formed at the $177.17 mark on May 24. Eventually, Netflix will retrace to print another higher low, which could provide an entry point for bullish traders who aren’t already in a position.
Netflix has two gaps above, with the closest gap falling between $248.70 and $333.22. Gaps on charts fill about 90% of the time, which indicates Netflix will rise up to fill the empty trading range in the future, although it could be some time before that happens. Netflix has resistance above at $200.82 and $212.98 and support below at $186.40 and $178.38.