NFLX | Short Opportunity | 3 Day Chart |Correction of 9% - 22%
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I want to provide information for all long & short term traders. Long can hedge against this move, and shorts can profit from the correction.
A. Netflix has gained over 68% over the last four months; there is no doubt that due to the COVID - 19, the amount of membership has increased dramatically. It has a current P/E ratio of 96 compared to its biggest competitor Disney with a P/E ratio of 37.
B. Netflix has created fantastic content, which has helped them almost double their revenue and contribute a higher EPS to shareholders from 2017 to 2019.
C. Analyzing the 3-day chart, we find divergence since the start of the COVID 19 in March. On Feb 14, 2020, the RSI was a high-level os 75 at the price of $400. Since then, it crashed down to $300 and back to $480 this week with an RSI of 63.
D. Divergence is a sign that the trend is getting weaker since there are fewer buyers, and we could expect a change in pattern.
E.Corrections :
1. The first correction I expect it is a solid uptrend is to bounce at the 20 EMA at $433 and break overbought conditions at 70RSI to break the divergence.
2. The second possibility is a correction of 38.2%, which is next to the 50 EMA, which is 22% away from the current price at $394.
3. The last possibility is that it bounces the 100 EMA at $365.
4. Use this correction points to average in or to hedge against you long positions.
Trade safe and do your own DD.
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I want to provide information for all long & short term traders. Long can hedge against this move, and shorts can profit from the correction.
A. Netflix has gained over 68% over the last four months; there is no doubt that due to the COVID - 19, the amount of membership has increased dramatically. It has a current P/E ratio of 96 compared to its biggest competitor Disney with a P/E ratio of 37.
B. Netflix has created fantastic content, which has helped them almost double their revenue and contribute a higher EPS to shareholders from 2017 to 2019.
C. Analyzing the 3-day chart, we find divergence since the start of the COVID 19 in March. On Feb 14, 2020, the RSI was a high-level os 75 at the price of $400. Since then, it crashed down to $300 and back to $480 this week with an RSI of 63.
D. Divergence is a sign that the trend is getting weaker since there are fewer buyers, and we could expect a change in pattern.
E.Corrections :
1. The first correction I expect it is a solid uptrend is to bounce at the 20 EMA at $433 and break overbought conditions at 70RSI to break the divergence.
2. The second possibility is a correction of 38.2%, which is next to the 50 EMA, which is 22% away from the current price at $394.
3. The last possibility is that it bounces the 100 EMA at $365.
4. Use this correction points to average in or to hedge against you long positions.
Trade safe and do your own DD.
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