Netflix Stock Chart Shows Potential 10% Recovery

Netflix (NFLX) - Get Report didn't excite Wall Street last month with strong enough second-quarter guidance. The stock was punished, falling some 13% on the news, from around $108 per share to $94. The bleeding continued in the days that followed, with the stock settling at around $88.

But the selling has stopped, and it's time to get back in.

Shares of the streaming movie giant actually saw a modest rise last week, reaching as high as $93.25. That's an almost 6% rise from its post-earnings low of $88.21. Netflix shares closed Friday at $90.84, up 1.6%, marking an 11% rise from their February low of $81.86. The shares have fallen some 20% year to date, compared with a 0.65% rise in the S&P 500 (SPX) index.

But the Netflix chart now shows a possible recovery of an additional 10% to around $100 per share. Take a look at chart below, courtesy of TradingView.

There's several ways to asses where Netflix stock may land next. Wall Street's view of the stock remains a factor to consider. The shares have a consensus buy rating from analysts and an average 12-month price target of $122.

From a technical perspective, the chart says Netflix stock is poised to reach $100 in the next couple of weeks.

First and foremost, Netflix shares, at around $90, trade well below all three key moving averages: 20-day ($97.23, the blue line), 50-day ($98.91, the pink line) and 100-day ($100.98, the yellow line). From a technical perspective, this implies that Netflix stock is broken. At the same time, all three moving averages converge around the same area, near $100, which suggests where the shares are likely to move next.

As you can see from the two solid blue lines, Netflix stock has bounced around that level twice in the past couple of sessions, including two spikes north of $93, suggesting the shares are ready to move higher. The solid red line, which somewhat parallels the 20-day average of around $98, is now the immediate target. Once that target is reached, Netflix looks ready to reclaim its 100-day average of $100 per share.

How to execute the trade: Buy Netflix stock between $90 and $92, using the post-earnings low of $88.21 as near-term support. With the post-earnings selling over with, averaging down would be a smart move. The chart says Netflix should reach $98 to $100 in a few weeks, yielding stock gains of 8% to 10%.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.