Netflix Is Moving Through A Second Wave
Netflix is working through a pullback within a larger bullish setup, and the next few weeks will determine whether the bigger move is ready to begin.
Just over a month ago, I outlined Netflix’s NFLX 0.00%↑ move off the low was likely the bottom in its fourth wave. It was a direct move to the target rather than more of a consolidation, which can happen in fourth waves. The immediate move off the fourth wave low appeared to be the first wave of the fifth wave, and I said we should be on the lookout for a second wave pullback before this fifth wave really gets underway.
Thus far, that second wave has shaped up nicely, and right on track. But it’s not complete just yet, as there’s one more low to complete wave C of this second wave. Even with the expanded B wave setup it now has pushed into on Monday’s open.
Over the next few weeks, I expect to see Netflix head back down toward the $89-$90 area (and doing so in five waves, as is typical C wave structure). The target area is the 38.2% retrace and the 100% extension of waves (a) and (b). Currently, these two levels line up on the chart, creating confluence and thus a strong support level.
Nonetheless, anywhere in the upper green box is fair game, but for right now, the target is toward the upper end of it at the Fib levels. Once we do see it land in the target zone, I’m looking for a completion of the C wave structure, and thus wave circle 2, and will be on watch for five waves up to start wave circle 3.
If it only provides three waves up, then this second wave will be ongoing and be looking to bounce back toward the mid-$90s before a move down to the mid-$80s. But due to the size of this corrective move at this degree, it’s more likely this is all of wave circle 2. But unless you’re willing to be very aggressive, it’s not a thing I trade on until I see the five up confirmation.
If we get the five up confirmation off the second wave low, circle 3 targets the $138 area at the higher degree’s 161.8%.
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