The technical price pattern highlighted on the above NFLX stock chart is a cup and handle pattern.
A cup and handle price pattern is created when a significant level of price resistance prevents the stock price from advancing beyond it. In this case, the level of price resistance currently resides at $360.
This inability to move beyond a significant level of price resistance, and the process of testing it from beneath, has created two very large and distinct troughs. The first trough is much larger than the second. These troughs create a picture that depicts a teacup, creating the cup and handle price pattern.
In order to complete the pattern, NFLX stock needs a sustained close above $360.00. A completed cup and handle pattern would imply that higher stock prices are likely to follow. That’s for the simple reason that the stock price is free to appreciate because the level of price resistance that contained the stock price has finally been broken.
The repercussions of this pattern are directly related to its size. From a linear perspective, a break above $360.00 would suggest that $490.00 is a viable price objective for Netflix stock. If you’re wondering, this objective was obtained by taking the depth of the pattern and extrapolating that value above the significant level of price resistance
Additionally, the stock has been rising along a bullish uptrend since the end of January. But so far technical resistance around $360 has not allowed the stock to advance further. The uptrend and the resistance level have also created a bullish technical pattern known as an ascending triangle . Should the stock price rise above $360, as the pattern suggests, it would signal a technical breakout, resulting in the stock rising to $400, an increase of about 11% from its resistance level.
Bullish momentum has been returning to the stock as measured by the relative strength index ( RSI ). That is because the relative strength index has been slowly trending higher since the end of January.
For a break to be considered valid, it should be on a closing basis. Some traders apply a price (3% break) or time (sustained for 3 days) filter to confirm validity. The breakout should occur with an expansion in volume , especially on upside breakouts.
A cup and handle price pattern is created when a significant level of price resistance prevents the stock price from advancing beyond it. In this case, the level of price resistance currently resides at $360.
This inability to move beyond a significant level of price resistance, and the process of testing it from beneath, has created two very large and distinct troughs. The first trough is much larger than the second. These troughs create a picture that depicts a teacup, creating the cup and handle price pattern.
In order to complete the pattern, NFLX stock needs a sustained close above $360.00. A completed cup and handle pattern would imply that higher stock prices are likely to follow. That’s for the simple reason that the stock price is free to appreciate because the level of price resistance that contained the stock price has finally been broken.
The repercussions of this pattern are directly related to its size. From a linear perspective, a break above $360.00 would suggest that $490.00 is a viable price objective for Netflix stock. If you’re wondering, this objective was obtained by taking the depth of the pattern and extrapolating that value above the significant level of price resistance
Additionally, the stock has been rising along a bullish uptrend since the end of January. But so far technical resistance around $360 has not allowed the stock to advance further. The uptrend and the resistance level have also created a bullish technical pattern known as an ascending triangle . Should the stock price rise above $360, as the pattern suggests, it would signal a technical breakout, resulting in the stock rising to $400, an increase of about 11% from its resistance level.
Bullish momentum has been returning to the stock as measured by the relative strength index ( RSI ). That is because the relative strength index has been slowly trending higher since the end of January.
For a break to be considered valid, it should be on a closing basis. Some traders apply a price (3% break) or time (sustained for 3 days) filter to confirm validity. The breakout should occur with an expansion in volume , especially on upside breakouts.