I would like to start this post with a brief recap of the last week's analysis.
COIN → +210%
PLUG → -50% (Stop Loss)
SQ → +300%
NFLX → -40% (Stop Loss)
AA → No Entry Yet
We have made some losses, but our two runners were enough to cover the losses and even make some profit. I will do my best to keep up the quality of analyses I provide :)
I'm back with NFLX again. Though we have stoped out of the earlier swing trade, tomorrow seems like a much better entry point than the last week's. From the weekly chart above, you can first see that NFLX is at a key support trend line. In fact, it has already bounced from the trendline.
Furthermore, the RSI is currently in the low 20s; it is currently oversold and we may expect some bounce or trend reversal to occur.
Currently, there exists a strong resistance zone between $525 and $535. It will be tough to break out of this zone, but once we do, NFLX will experience a strong trend reversal (support trendline + breakout of the strong resistance zone + low volume profile zone).
Then our next target will be around $580 where strong previous support and high volume profile wall exists.
I will enter if the breakout of the resistance zone is confirmed. Our stop loss will be below the support trendline.
Previously, it took NFLX 25 bars or 36 days to move up 15% from the support trendline. Likewise, we can expect the reversal to take approximately 30 days or a month to move up 10% to $580s.
Therefore, I would buy a 580 call option two months away from today (expiring March 18).
The most important concept to take away from today's analysis report is:
When swinging options, we want to pick a strike and expiration that will be ITM about halfway to the expiration if playing OTM calls