Are there further declines in store for Netflix?

Netflix (NASDAQ: NFLX) traded slightly higher this week, after hitting support at 340 on Tuesday. Overall though, the price structure remains of lower highs and lower lows below the downside resistance line drawn from the high of November 17^th, which is also the stock’s all-time high, and thus, we will consider the near-term outlook to still be negative.

The recovery may continue for a while more, but investors may jump out of the action again after testing the round number of 400, which is slightly above the peak of February 28^th. This may result another slide and another test near 340, the break of which would confirm a forthcoming lower low and perhaps pave the way towards the 290 zone, marked by the low of March 17^th, 2020. If no buyers are to be found there, then we could see the slide extending towards the 265 or 255 zones, marked by the lows of October 22^nd and October 3^rd, respectively.

Shifting attention to our short-term oscillators, we see that the RSI turned down after hitting resistance near 50, while the MACD, although negative, remains above its trigger line. Both indicators detect negative momentum, but the fact that the MACD remains above its trigger line adds to the view that the current recovery may continue for a while more before the next negative leg.

In order to start examining whether market participants have gained interest to this stock again, we would like to see a clear recovery above 505. This will confirm the break above the downside resistance line drawn from the peak of November 17^th, and may see scope for advances towards the peak of January 12^th, at 544. If that barrier is broken, then we could experience extensions towards the 584 hurdle, marked by the inside swing low of December 17^th, or the 620 territory, defined by the peak of December 30^th.