Netflix shares could be in for a long-term selloff, as a reversal pattern can be seen on its 4-hour time frame. The stock has created a head and shoulders formation, indicating that the recent uptrend might soon turn.
For now, the 100 SMA is above the 200 SMA, which suggests that the uptrend could still stay intact. However, a break below the formation’s neckline around the $90/share level could be an early signal that a selloff is in order.
Stochastic is moving up, also suggesting that a possible bounce might take place, likely until the area of interest around $110/share or the 100 SMA. Stronger buying momentum could lead to a move up to the previous highs past $120/share.
Netflix Shares Outlook
Rumor has it that Netflix is planning on expanding its services to Asia, as other smaller companies such as iFlix and Hooq are battling to get market share in the region. This could pave the way for more revenues for the streaming service, although it could also incur higher costs for the company.
According to the company’s press release, it will expand its services to Hong Kong, Taiwan, South Korea, and Singapore by early next year. Among the countries in the region, these have optimal network speeds to support Netflix streaming.
International expansion has allowed Netflix shares to gain ground this year, with 41 million paid subscribers in the U.S or around 13% of the entire country’s population. Netflix shares already got a boost from the company’s offerings in Japan earlier this year.
“The combination of increasing Internet speeds and ubiquity of connected devices provides consumers with the anytime, anywhere ability to enjoy their favorite TV shows and movies on the Netflix service,” said Reed Hastings, chief executive officer of Netflix. “These four markets well represent those trends.”
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