Shorting Netflix: A Technical Trade Based on Elliott Wave TheoryIn this technical analysis trade, we are considering a short position on Netflix (NFLX) as the stock is currently trading at $345.50. Our analysis shows that the price has reached the B point of an Elliott Wave pattern, which typically precedes a corrective wave. Elliott Wave Theory suggests that financial markets move in repetitive patterns called waves, with five impulse waves moving in the direction of the primary trend, followed by three corrective waves against the trend. In our case, we have identified a completed impulse wave and expect a corrective wave to unfold, potentially driving the stock price down to $260.
Moreover, the pivot point is providing strong resistance, adding weight to our bearish outlook. Pivot points are calculated using the high, low, and closing prices of a security from the previous trading session, and they can serve as potential support and resistance levels. In this instance, the pivot point resistance is preventing the stock from moving higher, increasing the likelihood of a reversal.
This trade idea is based on technical indicators and should be approached with risk management strategies in place. Keep in mind that past performance does not guarantee future results, and trading carries inherent risks.
