Netflix (NASDAQ:NFLX) is one of those companies that performed very well during the coronavirus pandemic, with subscribers continuing to grow as most nations around the globe have restrictions in place, keeping their citizens at home. Today, after the US closing bell, the firm reports its earnings results for Q4 2020, and expectations are for earnings to rise at the slowest pace in six quarters, despite strong revenue growth compared to the same period a year earlier. Investors will also monitor the company’s streaming paid memberships, which are expected to have grown slightly faster than the same quarter a year ago, but slower than the previous quarters of 2020.
From the technical side, the stock remains within a wide range, between 467.00 and its record high of 575.24, since July 1, and thus, even if the earnings result in a gap, either up or down, we prefer to wait for the price to exit the range before we start discussing the next directional path.
On the downside, a break below 467.00 may signal the downside exit out of the range and would confirm a forthcoming lower low on the daily chart. Investors may then allow declines towards the low of June 29, at 433.00, the break of which is likely to extend the fall towards the psychological round figure of 400.00, which provided support between April 29 and June 5.
Shifting attention to our daily oscillators, we see that the RSI lies below its 50 line and points down, while the MACD lies below both its zero and trigger lines, pointing south as well. Both indicators detect downside speed, but as we already noted, until we see the stock exiting the aforementioned range, we will stay sidelined.
Now in order to start examining whether the outlook has turned bullish again, we would like to see a break above the range’s upper bound, at 575.24, which is also the stock’s all-time high. Such a move would take the share into uncharted territory and may initially pave the way towards the round figure of 600.00. Another break, above 600.00 may carry larger bullish implications, perhaps setting the stage towards the 161.8% extension level of the range’s width, at around 645.00.