Netflix (NASDAQ 🙂 (NASDAQ: NFLX) may have taken a hit by being left outside Apple (NASDAQ: AAPL), a new video service that fell by 2.3% yesterday, but we're not convinced this can change fundamental image. Although the new competition may affect the long-term outlook, we are bullish in the medium term. International growth is increasing and string cutting is in an upward trend. In addition, it is unlikely that consumers will cancel their Netflix $ 10 per month plan even in recession.
The market has a pricing of 8 percent of long-term revenue growth. Credit Suisse (SIX 🙂 wrote in a note to investors "the market assumes that NFLX will reach 335 million subscribers by 2028", which will more than double the current number of slightly more than 148 million subscribers. Netflix will capture 42 percent of all global broadband households, excluding China, the company calculates.
The shares have risen by more than 6,000 percent in the last 10 years, alone by 33 percent this year.
The dominant position of Netflix in the Internet entertainment market has made it possible to drastically increase prices to compensate domestic subscription growth. But this benefit can not last. Apple plans to start video services in April, forcing Netflix to revise its prices. At the same time, the costs of content are being boosted by competition. HBO & # 39; s "Game of Thrones" costs $ 10 million per episode. Netflix paid 30% more per episode for & # 39; The Crown & # 39 ;.
Daily chart Netflix
Daily chart Netflix
The meteoric performance of the flowing mammoth so far is clearly reflected in the technicals. The price returned from the 100-week MA and has offered strong support to the shares since 2013, with the latter pushing the price up 45%, rising above its downward trend since June 2018 and reaching its highest level since October 15. That painted the most bullish picture among the FANG shares.
After crossing the downtrend line in June, it is trending into an ascending triangle, where enthusiastic buyers are constantly increasing their bids while vendors' offers remain stable.
The triple MAs also reverse a bearish pattern, with each shorter MA being smaller than any longer, with the 50 DMA less than 3 percent below 100 DMA and approaching from below. Also the rising triangular pattern is formed after the prices have been successfully scaled over the famous 3.
Finally, and perhaps the most appealing aspect of the ascending triangle, it is just after the declining trend since June, and from now on the bull-bear battle on the trend is demonstrated.
Trading strategies – preparation of long positions
Conservative traders have to wait for the short-term trend since the kertrally after a decisive outbreak, with a penetration of at least 3 percent to reduce the chance of a bull trap, followed by a return to support the triangle, or to its least the broken line of the downward trend since June, with at least one long, green candle that follows a red or a small candle of both colors.
Moderate traders could buy the shares after a breakout of 2 percent, followed by a pullback for better entry, but not necessarily as proof of support for the pattern.
Aggressive traders risk a long participation with a penetration of 1 percent.
Trade sample
Mention: $ 362
Stop loss: $ 355
Risk: $ 7
Target (NYSE :): $ 385, October peak resistance
Reward: $ 23
Risk-Reward Ratio: 1: 4
