Watch These Netflix Stock Price Levels After Streamer Issues Soft Outlook

Netflix (NFLX) shares traded slightly lower in extended trading Thursday after the streaming giant’s soft outlook overshadowed second-quarter results that came in ahead of Wall Street expectations.

Below, we take a closer look at the Netflix chart and use technical analysis to point out key post-earnings levels to watch out for.

Chart Signals Tiring Uptrend

Netflix shares have tracked steadily higher since mid-2022, with the trend gathering strength after the 50-day moving average (MA) crossed above the 200-day MA four months later to form a bullish golden cross pattern.

Despite the streaming giant’s long-term uptrend, recent technicals on the chart indicate weakening buying appetite.

Firstly, two distinct peaks have formed throughout June and July, potentially carving out a double top, a chart pattern that signals a reversal after a security reaches a high price two consecutive times. 

Secondly, as the share price made its second high, the relative strength index (RSI) made a shallower high to create a bearish divergence, suggesting waning momentum.

Finally, the stock broke down below the closely watched 50-day MA on Thursday leading into the company’s earnings report, a sign that investors could be positioning for a “sell the news” event.

Monitor These Key Retracement Levels

If Netflix shares undergo a post-earnings decline, investors should monitor five key areas on the chart that may attract buying interest.

The first level to watch sits less than 1% below Thursday’s close at $638, a location that may garner support near a series of price actions over the past five months.

A close below this region could see the shares fall to around $550, where they may find buyers near the rising 200-day MA and an established uptrend line that extends back to July 2022.

The next lower area to watch is situated at $500, where a period of consolidation prior to the January stock gap could provide support.

A further decline may see the shares revisit the $440 region, an area on that chart where buyers could seek an entry point near several prior highs in the stock between June and September last year.

The final area to monitor sits around $365, where the streaming giant’s stock would likely attract buying interest near the 2023 February swing high and October swing low.

Netflix shares fell 0.2% to $641.89 in after-hours trading.

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As of the date this article was written, the author does not own any of the above securities.