Is Netflix Ready for a Pull Back?

Published on Friday, 25 January 2013 08:16 Written by TradersHuddle Wire

New York, January 25th (TradersHuddle.com) - Shares of Netflix Inc. (NASDAQ:NFLX) closed the trading day at $146.86 well above its calculated resistance at $104.50. The move spurred concern among traders over a possible pullback in the stock price. The resistance level was calculated using a peak and throughs algorithm.

Netflix Inc. (NASDAQ:NFLX) is an online movie rental service. The company delivers its rentals by regular mail, using DVDs, or by its internet streaming service.

Netflix broke out of its defined range that had support at $95.75 and resistance at $104.50. Now the stock is working on developing a new trading range, which should be defined by the high reached after this breakout and its probable support at its previous resistance level at $104.50.

From a technical perspective, traders should wait to establish a position in Netflix until a base in the stock develops. This can help traders define risk before entering into a position, as it will provide good reference points to the upside and most importantly to the downside.